Prediction Markets vs the States: NFL, Coinbase and the Road to the Supreme Court
One question now splits US courts, states, sports leagues and crypto exchanges: is a sports event contract a federally regulated swap or a state-regulated bet? In one week the NFL took a side at the Supreme Court, Coinbase pulled sports markets from Michigan and the CFTC proposed new rules.
Quick Take
- Courts disagree: the Third Circuit sided with Kalshi in April 2026, while the Ninth and Sixth Circuits ruled that sports event contracts are not swaps.
- New Jersey, Robinhood and Crypto.com’s exchange have asked the Supreme Court to decide; on 8 October the NFL filed a brief backing state regulation.
- Coinbase agreed to stop sports contracts in Michigan from 10 October, and on 9 October the CFTC released two rulemakings on what counts as a swap.
The Question at the Centre
Platforms such as Kalshi let users buy contracts that pay out if a team wins. Kalshi argues these are swaps traded on an exchange regulated by the Commodity Futures Trading Commission (CFTC), so state gambling laws do not apply. States argue they are sports bets that need a state licence. The answer decides whether sports contracts on these platforms answer to one federal regulator or to each state’s gambling laws.
Courts Are Split
| Court | Date | Outcome |
|---|---|---|
| Third Circuit (New Jersey) | 6 Apr 2026 | 2–1 for Kalshi: contracts are swaps, state law preempted |
| Ninth Circuit (Nevada) | 28 Aug 2026 | Against Kalshi, Crypto.com and Robinhood: not swaps |
| Sixth Circuit (Ohio, Tennessee) | Late Sep 2026 | Unanimous: Kalshi’s sports contracts are not swaps |
Three petitions now ask the Supreme Court to settle it. New Jersey filed Flaherty v. KalshiEX (No. 26-299) on 2 September, followed by Robinhood on 10 September and Crypto.com’s North American Derivatives Exchange on 11 September. On 7 October a bipartisan coalition of 39 state attorneys general, led by Ohio, filed a brief backing New Jersey, as did two gaming regulators’ associations. If the Court takes a case this term, lawyers following the cases expect argument in spring 2027 and a decision by the end of June 2027.
The NFL Takes a Side
On 8 October the NFL filed an amicus brief urging the Court to hear New Jersey’s case. The league argues that sports contracts are gambling, not swaps, because swaps hedge an existing financial risk and a sports contract does not. It wants prediction markets to adopt sportsbook-style safeguards, including higher age limits and closer cooperation with leagues on insider information. Kalshi rejected the position, saying the CFTC already polices sports markets and federal oversight is more consistent than state-by-state rules.
Coinbase Pulls Sports From Michigan
The crypto exchange agreed with the Michigan Gaming Control Board on 7 October to stop listing sports event contracts in the state and to close open sports trades by midnight Eastern Time on 10 October, while its federal appeal continues. Robinhood reached a similar accord in September, and a state judge ordered Kalshi to geoblock Michigan. “Whether by agreement or court order, we intend to bring all sports betting into compliance with the law,” said Michigan Attorney General Dana Nessel. After the Sixth Circuit ruling, Ohio’s Casino Control Commission sent cease-and-desist letters to 10 prediction market operators, Coinbase among them.
The CFTC Moves
On 9 October the CFTC released two rulemakings. An interim final rule excludes casino-style gambling offered under state or tribal law from its jurisdiction, as long as it is not traded on an organised exchange. A separate proposal would write event contracts on sports, politics, culture and weather into the definition of a swap. Both carry 30-day comment periods after publication. The NBA’s Adam Silver has asked for access to trading data and a minimum age of 21: “we have roughly 40 different jurisdictions regulating us right now.”
What It Means for Users
Access to sports contracts now depends on the state, and it can change at short notice. The pending cases are about sports contracts only; they do not decide contracts on elections, economic data or crypto prices. For crypto users, the fight matters because exchanges such as Coinbase and Crypto.com have moved into the same territory as sportsbooks. Our Regulation Tracker follows the rules country by country.
Cocktailspins Weekly Brief
One email a week: the regulation changes, market news and events that matter for crypto gambling. Verified, no spam.
18+ only. Unsubscribe any time. See our privacy policy.FAQ
Are prediction markets legal in the US?
It depends on the contract and the state. Kalshi is a CFTC-regulated exchange, but federal appeals courts disagree on whether its sports contracts are swaps or bets, and several states, including Michigan and Ohio, are enforcing their gambling laws against sports contracts.
What is Flaherty v. KalshiEX?
It is New Jersey's petition to the US Supreme Court (No. 26-299), filed on 2 September 2026, asking the Court to review the Third Circuit's April 2026 ruling that Kalshi's sports contracts are swaps under exclusive federal jurisdiction.
Why did Coinbase stop sports prediction markets in Michigan?
Under an agreement with the Michigan Gaming Control Board announced on 7 October 2026, Coinbase stopped listing sports contracts in Michigan and closed open sports trades by midnight Eastern Time on 10 October while its federal appeal continues.
When will the Supreme Court decide on prediction markets?
If the Court accepts a case this term, argument would be expected in spring 2027 and a decision by the end of June 2027. If it waits, a ruling could take a year or more longer.
Sources
↗ The Block — NFL tells Supreme Court prediction market sports contracts are gambling, not swaps ↗ DeSilva Law — Three petitions, two circuits, twenty states: prediction markets reach the Supreme Court ↗ New Jersey Office of the Attorney General — Petition for a writ of certiorari (No. 26-299) ↗ SBC Americas — Coinbase agrees to stop offering sports in Michigan ↗ Sports Betting Dime — State AGs ask SCOTUS to hear prediction market case ↗ RG.org — States and gaming regulators back New Jersey’s Kalshi petition ↗ Gambling Insider — CFTC clarifies sports betting rules, NBA seeks prediction market data18+ only. Gambling laws differ by country and change quickly — check the rules where you live. If gambling stops being fun, BeGambleAware and GamCare offer free, confidential support.