Crypto.com and Robinhood have petitioned the US Supreme Court to decide whether federal commodities law strips states of the power to regulate sports event contracts, taking the prediction markets fight to the highest court after both lost to Nevada at the Ninth Circuit.
The two petitions were filed within a day of each other last week and put the same question: whether the Commodity Exchange Act preempts state regulation of sports event contracts traded on a Designated Contract Market. New Jersey has already asked the justices to answer it, from the losing side, after Kalshi beat the state at the Third Circuit. Three sets of filings now sit in front of the court on one statutory point, arriving from opposite ends of a circuit split.
A Robinhood spokesperson said the company wants the jurisdictional question settled federally.
The Supreme Court now has the opportunity to provide clarity on the regulation of prediction markets, which we believe rightly sits with the CFTC.
Crypto.com framed its petition the same way.
Today’s petition to the Supreme Court is an important step toward obtaining clarity on who gets to regulate federally registered prediction markets.
The swaps argument
Both companies rest their case on one definition. If a sports event contract is a swap under the Commodity Exchange Act, it sits with the CFTC and state gambling law does not reach it. Crypto.com’s filing argues the payout structure decides the point.
Sports-event contracts are swaps because their payout depends on the occurrence of a sporting outcome (the “event or contingency”, e.g. did the Rams make the playoffs?) that is associated with potential economic consequences.
The petition reads “economic consequences” widely, citing municipal revenue from a championship run and the policing costs that follow crowd trouble after a result. It also points out that Congress named gaming as a category the CFTC is allowed to ban, arguing that legislators expected swaps and gambling to overlap in the first place. That argument goes straight at the reasoning the Ninth Circuit used against them.
What the Ninth Circuit held
A three-judge panel ruled for Nevada on 28 August, in a case the state brought alongside the Nevada Resort Association against Kalshi, Crypto.com and Robinhood together. Judge Ryan Nelson wrote the opinion, finding the contracts are likely not swaps and that federal law does not displace Nevada’s licensing regime.
The definition of a “swap” might cover the sports event contracts here and thus preempt Nevada law. But that broad reading is not the best textual reading.
Nevada Gaming Control Board chairman Mike Dreitzer put the state’s position in one line.
This is sports betting and needs to be properly regulated by the state.
The Third Circuit read the same statute the other way for Kalshi, which is the split the petitions are built on. The disagreement runs down to what counts as an event, an occurrence and a swap, so there is no narrow ground for the Supreme Court to decide it on.
Kalshi keeps a second track open
Kalshi, the largest US prediction market by volume and the most active of the three in court, has not filed for certiorari with the others. It asked the Ninth Circuit for an en banc rehearing instead, a request that rarely succeeds but keeps state enforcement at bay while it is pending. It also lost an injunction bid in Iowa, adding another federal court to the list where its argument has failed this year.
The timing of the rehearing request next to the two cert petitions has been read as coordination between the platforms. None of the companies has said so.
The CFTC’s position
Crypto.com says the CFTC supports the industry’s attempt to get an answer through the courts. The commission has also put revised event contract rules into play, which could settle the definitional question or complicate it further depending on where the final text lands. A Supreme Court ruling would sit above both.
What European operators get out of this
The US case decides whether a federally registered exchange can offer sports outcomes in states that never licensed it. That is the same structural question European regulators keep running into, and so far they have answered it quickly. The Dutch, British, French, German and Italian authorities have all moved against prediction market access without waiting for a court to define the product for them.
Capital is still arriving on the other side of that line. Equity investment into prediction markets continues while the legal basis is unresolved, and the valuations assume the American federal reading wins. A ruling for Nevada would leave the sector answering to 50 state regulators, on terms much closer to the licensing and tax conditions that the established US betting market already works under.
The justices have not said whether they will take any of the three petitions, and a grant is far from automatic. If one comes, the first federal answer on sports event contracts lands on a docket where the product will be defined by commodities law rather than gambling law, with operators on both sides of the Atlantic bound by whichever definition survives.
Source: Crypto.com and Robinhood
