The U.S. Supreme Court has yet to decide whether it will hear the legal battle over prediction markets, but pressure for a review is mounting. Multiple parties have submitted amicus briefs, while the Commodity Futures Trading Commission (CFTC) has issued an interim final rule and proposed additional regulations outlining its position.
Last week, a range of organizations and former officials asked the Supreme Court to examine whether sports-related prediction market contracts should be classified as swaps under federal law. The CFTC added to the debate on Friday by releasing two regulatory measures addressing how these contracts fit within its authority.
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Dodd Argues Against Federal Control of Sports Prediction Markets
What’s Behind the Dispute?
Former Senator Chris Dodd, former CFTC and SEC Chair Gary Gensler, the National Football League (NFL), 39 states and the District of Columbia, 145 tribal nations, and several other parties have filed amicus briefs asking the Supreme Court to take up the case.
Many of these submissions argue that contracts tied to sporting outcomes should be treated as gambling products rather than financial swaps, leaving their regulation primarily to state authorities instead of the CFTC.
The prospect of Supreme Court involvement emerged in earlier discussions, but the legal landscape has since shifted. Federal appeals courts are now divided on the issue. Two appellate courts have determined that sports-related prediction markets fall under state gambling laws, while another has ruled that the CFTC has jurisdiction over them.
Dodd Challenges the CFTC’s Authority
Most of the recent amicus briefs support the states’ position, urging the Supreme Court to distinguish sports wagering from financial derivatives.
Dodd, whose name appears in the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act, argued that the law was not intended to give the CFTC the power to displace state governments’ authority over gambling.
His filing challenged a 2-1 ruling by a Third Circuit Court of Appeals panel that found the CFTC had jurisdiction over swaps and prediction market contracts involving sports. Dodd argued that financial derivatives serve a different purpose from bets on sporting events.
The brief specifically questioned whether parlays—which combine multiple wagers involving point spreads, player performances, different games or different sports—serve legitimate financial functions such as hedging risks or helping markets discover prices. It also disputed whether these contracts meet the Commodity Exchange Act’s requirements for products with potential financial, economic or commercial consequences.
Dodd also rejected the argument that the CFTC’s exclusive jurisdiction automatically shields every contract listed on a designated contract market (DCM) from state and tribal laws. His filing maintained that the provision establishes federal oversight of covered financial instruments rather than granting blanket immunity from other applicable laws.
Gensler, who played a key role in developing regulations under Dodd-Frank, made a similar argument. He said the legislation did not give the CFTC the authority to override state gambling laws, a position he has also advanced in an appellate court dispute.
NFL Criticizes the CFTC’s Approach
The NFL joined the legal debate, arguing that it has a direct interest in how sports-related prediction markets are regulated because of the close relationship between sports and betting.
The league criticized what it described as the CFTC’s hands-off approach and pointed to differences between state rules governing gambling operators and federal oversight of designated contract markets, the licensing structure used by prediction market platforms.
CFTC Sets Out Its Regulatory Interpretation
On Friday, the CFTC released an interim final rule alongside a separate proposed rule addressing the classification of prediction market products under the definition of a swap.
The agency said casino-style gambling does not fall within its definition of swaps, while event contracts do. It also proposed formally including contracts tied to sports, politics, cultural events and weather within the category of event contracts regulated as swaps.
The measures clarify the CFTC’s position as the legal dispute continues over whether federal commodities regulation or state gambling laws should govern sports prediction markets.
Prediction market operator Kalshi has received an extension to submit its response to the Supreme Court. The revised deadline is November 9, 2026.
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