Kalshi Faces a Supreme Court Showdown Over Sports Betting

Key Points

• We’re looking at a best-case scenario if the Supreme Court delivers a decision by June 2027, but according to gaming lawyer Daniel Wallach, we are just as likely to be waiting until 2028.
• Kalshi has until 9 November to respond to the request, which in turn could be delayed further by the possibility that the federal government will chime in and share its views.
• Amicus briefs piled in fast and furious; we are talking over 11 from a variety of sources, including the NFL, 39 states and even a former senator named Christopher Dodd.

Can Something Be Legal In One State But Against The Law In The Other?

Kalshi’s sports contracts are perfectly fine in New Jersey, but in Nevada, Ohio and Tennessee they are suddenly able to be blocked. The only body that can sort this mess out is the Supreme Court, and the question remains: when are they going to get around to it?

Talking to people at the Global Gaming Expo in Las Vegas, gaming attorney Daniel Wallach fleshed out the fastest possible route. According to a report by Covers, Wallach reckons the court will agree to hear the case in December 2026 or January 2027. Then there will be some arguments in March or April and, voila, a decision in June 2027. This is the best-case scenario according to Wallach, and we can at least say that a later ruling is definitely possible. If the court doesn’t take on the case early in 2027, then we might not see a decision at all before 2028. When the term started last October, there was no mention of any prediction market case on the court’s list.

Three Different Answers From Three Different Courts

Things started to get underway in April when the Third Circuit came down on Kalshi’s side against New Jersey. They thought that Kalshi’s contracts were probably just swaps under the Commodity Exchange Act, which would put them firmly under federal control.

Then in late August, the Ninth Circuit made the opposite ruling in Nevada’s case: “The substance of the sports event contracts on Kalshi’s exchange is sports betting, plain and simple, regardless of whether Kalshi wants to call them something else.” The judges also said a Kalshi statement claiming they weren’t sports bets was “pretty dishonest”.

A month later, the Sixth Circuit gave permission to Ohio and Tennessee to enforce their own gambling laws. The judges said even if the contracts were swaps, federal law wouldn’t override the state laws. More decisions are still pending from the Fourth and Second Circuits.

A Docket So Crowded It Takes Only Five Weeks

New Jersey filed its petition on 2 September in the case of Flaherty v. KalshiEX, No. 26-299. In just five weeks, the official Supreme Court docket included at least 11 amicus briefs. On the side, Robinhood and Crypto.com separately requested the court to review their losses to Nevada in the Ninth Circuit.

Among the most surprising names appearing on the docket are those of former senator Christopher Dodd and former CFTC chair Gary Gensler. Dodd’s name appears on the 2010 Dodd-Frank Act that is central to Kalshi’s argument about the status of swaps. Neither amicus brief on the docket indicates the party being supported by either.

Ohio represented 38 other states and Washington, D.C. in supporting New Jersey. “They cannot strip the States of their core sovereign power through relabeling and window-dressing,” the coalition noted in its brief, as reported by Politico.

The next day, the NFL filed its own brief with some statistics showing its reasoning. The first week of NFL matches accounted for $1.8 billion of the $3.3 billion trading in prediction markets, as reported by CNBC citing the NFL’s brief. The NFL requests that there be a minimum age of 21 for participation, while Kalshi accepts users as young as 18.

Staffing Becomes The Argument In Itself

The NFL says in its brief that the CFTC has 543 employees overseeing derivatives markets in total. In turn, the regulators for gambling in Nevada and Pennsylvania have close to 400 employees each.

“Without adequate staff engaged in oversight and enforcement, even the best regulations cannot meaningfully ensure game integrity and consumer protection,” wrote the NFL’s lawyers in their brief. At the request of Senator Elizabeth Warren, the Government Accountability Office now plans to examine the issue of staffing at the CFTC, as reported by the Associated Press.

Kalshi responded with an assertive response: “Contrary to the NFL’s statements, the CFTC is actively policing sports-related markets, which are now listed on nearly every U.S. commodities exchange,” Elisabeth Diana, spokesperson for Kalshi, told CNBC. According to Brooke Nethercott, the CFTC’s spokesperson, the NFL refused to sign a memorandum of understanding with the CFTC.

Three Hurdles Standing Between Now And June

Kalshi’s response to New Jersey’s complaint is due on 9 November. After that date, the Supreme Court justices might ask the Solicitor General what the government thinks about the case, and according to Bloomberg, that would almost certainly kick the whole thing over to the 2027-2028 term. That’s what Bloomberg reported, anyway. The government’s already taken a side, though; back in May, President Trump said he’s got the CFTC’s back.

A Supreme Court expert told Front Office Sports that the earliest the case could get a green light is January. But there’s a pretty good chance it could slip to 2028 yet.

The second hurdle is Kalshi’s appeal to the full Ninth Circuit. If they decide to hear it, the Supreme Court justices are likely to wait and see how that plays out, although, to be honest, the expert I spoke to thinks that’s a pretty slim chance.

And then there’s the CFTC’s attempt to rewrite its rules for event contracts. The agency’s asked the courts to hold off on making a decision until that’s done, but the Ninth Circuit basically just shrugged and said proposed regulations don’t count for squat.

What’s Riding On The Final Answer?

Sports aren’t a side hustle for Kalshi; it’s its main game. The Ninth Circuit found that, in 2025, a whopping 90% of its trades, which generated 95% of its revenue, were all sports-related.

States have a stake too; in April 2026, the American Gaming Association estimated that states were losing out on $620 million in tax revenue because of prediction markets. And as it happens, Kalshi’s got a near monopoly on the CFTC-regulated US market; according to S&P Global Market Intelligence, it’s got more than 90% of it.

Forecasts about who’s going to win are all over the place. TD Cowen’s Jaret Seiberg thinks the CFTC has the edge, but it’s going to be a close call, he told American Banker after the judgment came in. But Wallach disagrees; he reckons the states have a 70% to 80% chance of coming out on top. And he points to 2018, when New Jersey pulled off a major win in the case of Murphy v. NCAA after a string of earlier losses.

Expert Analysis: Kalshi’s Own Words Against It

Our take is that Kalshi’s biggest legal risk isn’t the states; it’s actually its own past legal submissions. The Ninth Circuit quoted a 2024 Kalshi brief to the D.C. Circuit, and in it, Kalshi described a contract on a sporting event’s outcome as the “classic example” of a betting contract.

Now Kalshi is trying to spin that the very same kind of contract is actually a federally regulated swap. The court’s linked that shift to Kalshi’s new business strategy, and I think the justices are going to find it pretty hard to ignore that.

I reckon the calendar is working in the favour of Kalshi and the operators more than the law is; as long as the Third Circuit ruling stands, Kalshi’s sports contracts keep trading in New Jersey. So every month that the Supreme Court delays the decision is just more business and more revenue for Kalshi, regardless of the final outcome.

And the NFL isn’t entirely neutral on this one either; it’s got sportsbook partnerships and turned down the CFTC’s offer of a formal agreement, so it’s got its own interests at play as well as integrity concerns. Even so, $1.8 billion traded in a single Sunday is a figure that no regulator can just shrug off.

Where I reckon readers will be most likely to disagree is how much difference the CFTC’s rewrite of its rules is going to make.