The National Football League has formally aligned with New Jersey in its legal battle against prediction market operator Kalshi. In an amicus brief filed Thursday, the league urged the Supreme Court to take up New Jersey’s appeal of a Third Circuit ruling. That lower court decision classified Kalshi’s sports event contracts as "swaps" under the Commodity Futures Trading Commission’s exclusive jurisdiction, thereby shielding them from state gambling regulations. This creates a direct conflict with rulings from the Sixth and Ninth Circuits, which have determined such contracts fall under state oversight.
The NFL argues that Dodd-Frank’s definition of a swap applies only to instruments hedging existing risk, not bets creating new risk. The league detailed specific grievances regarding consumer protection and market integrity, noting that operators declined requests to ban easily manipulated bets involving injuries or officiating. The brief highlighted that Kalshi allows trading by individuals aged 18, whereas most states require bettors to be 21. Additionally, the NFL pointed to the CFTC’s limited resources, citing its 543 employees nationwide, and noted that NFL-related contracts accounted for $1.8 billion of the $3.3 billion traded across prediction markets on the season's first Sunday. Represented by former U.S. Attorney General William Barr, the league seeks a resolution before the 2027 season. If the Supreme Court upholds the Third Circuit’s view, the NFL stated it would push regulators and Congress for stronger protections rather than seeking to eliminate prediction markets entirely.
This intervention marks a critical escalation in the jurisdictional struggle between federal commodity regulation and state gambling authority. By siding with New Jersey, the NFL challenges the precedent set by the Third Circuit, arguing that the CFTC lacks both the statutory mandate and the operational capacity to police sports betting derivatives effectively. The league’s emphasis on the disparity between federal permissiveness and state age restrictions underscores a significant compliance gap that could expose operators to liability if the Supreme Court rules in favor of state sovereignty. The involvement of former Attorney General William Barr signals that this is no longer merely a commercial dispute but a high-stakes test of administrative law boundaries.
Market structure implications hinge on whether the Supreme Court grants certiorari, a move analysts suggest is now more likely given the NFL’s participation. A reversal of the Third Circuit ruling would fragment the national prediction market landscape, forcing operators like Kalshi to navigate a patchwork of state-specific licensing regimes rather than relying on a unified federal framework. Conversely, upholding the current ruling would validate the CFTC’s expansive interpretation of swaps, potentially accelerating institutional adoption despite concerns over insider trading controls and manipulation risks. Stakeholders must monitor how other leagues, such as MLB and NHL, adjust their partnerships with prediction platforms in response to this potential regulatory bifurcation.
