Supreme Court Might Decide Future of Kalshi Sport Event Contracts

Several state governments and Native American tribes have filed legal challenges against Kalshi, arguing that the company is running an unlicensed gambling operation, while the company and its supporters have said that its prediction market platform facilitates contracts that are allowed by federal law, according to the report.

A federal appeals court sided with Kalshi over the state of New Jersey earlier this month, but judges hearing an appeal out of Nevada made comments this week that suggested they may rule against the company. If that happens, it is likely the issue would head for the Supreme Court, the report said, citing gaming industry lawyers.

In the New Jersey case, the Third Circuit ruled that Kalshi’s offerings are event contracts that are classified as swaps under federal law, making them subject to the oversight of the Commodity Futures Trading Commission (CFTC), and that the company’s status as a swap operator means the federal government’s oversight of it takes precedence over state agencies’ powers, per the report.

In the Nevada case, Ninth Circuit judges appeared to favor the arguments of the state government over those of Kalshi, the report said. The court is set to rule on its case within weeks.

If the Ninth Circuit rules in favor of the state of Nevada, it will create the sort of split between circuits that could result in the Supreme Court hearing a case on the issue, according to the report.

PYMNTS reported in December 2025 that prediction markets are the latest flash point between federal and state regulators. While real-money prediction markets technically likely fall under the jurisdiction of the CFTC, a growing number of states have sought to shut down the markets they view as unlicensed or illegal gambling operations.

The CFTC filed separate lawsuits against Arizona, Connecticut and Illinois on April 2, saying the states have taken actions that intrude on the regulator’s exclusive jurisdiction to regulate prediction markets. The agency is seeking a declaration that its exclusive jurisdiction preempts state laws applied to its regulated event contracts.