- The NFL argues that prediction markets are gambling and should be regulated by the states, supporting New Jersey regulators in their fight against Kalshi.
- The NFL’s amicus brief comes after 39 states and Washington D.C. backed New Jersey, urging the Supreme Court of the United States to take the case.
- States and the NFL side with New Jersey regulators against Kalshi, but the NFL’s argument is to protect the game while the states’ argument focuses on law and regulation.
NEW YORK – The National Football League took to the Supreme Court of the United States (SCOTUS) to fight for state regulation of prediction markets. The amicus brief supports New Jersey regulators in their battle against Kalshi.
The NFL argues that prediction markets offer sports betting that evades state sports betting laws since their sports event contracts are “swaps” under the Commodity Exchange Act (CEA).
This has been the core argument in the courts, where the Third Circuit agreed with Kalshi’s argument that the Commodity Futures Trading Commission (CFTC) holds exclusive jurisdiction over the swaps. On the other hand, the Sixth Circuit and Ninth Circuit rulings disagreed, ruling that Kalshi’s sports event contracts don’t satisfy the definition of a swap.
NFL Focuses On Game Integrity
The NFL said they aren’t opposed to prediction markets, but the league is concerned about potential market manipulation. Some prediction markets offer contracts vulnerable to manipulation that aren’t available on NFL betting sites, like injuries and officiating.
The NFL also wants a minimum betting age of 21, while Kalshi accepts players starting at 18 years old. The NFL bans advertising for prediction platforms and differs from the other major sports leagues that have partnerships with prediction markets.
The NHL partners with Kalshi and Polymarket, while MLB, UFC, and MLS partner with Polymarket. Five MLB teams announced Kalshi partnerships in late August, with four of them (Padres, Dodgers, Giants, Braves) in states without legal sports betting.
The NBA isn’t actively partnered with a prediction market operator, but they’re in talks with Kalshi and Polymarket. LeBron James announced a Polymarket partnership in September.
NFL Accounting For More Than Half Of Predictions Volume
The NFL is partnered with DraftKings, FanDuel, and Fanatics Sportsbook, who could be losing out on players due to the emergence of prediction markets. According to the NFL’s amicus brief, “On the first Sunday of this NFL season, more than half of all prediction-markets’ trading volume—$1.8 billion out of $3.3 billion total— related to the NFL.”
The NFL later urged SCOTUS to hear the case for prediction market regulation, siding with New Jersey regulators against Kalshi. Their exact statement reads: “It is important that this Court grant certiorari now to provide clarity before another NFL season goes by. Billions of dollars will be bet on NFL games through prediction markets each season, and any delay from the Court will result in increasing consumer harm and risk to game integrity.”
39 States Urge SCOTUS To Hear Prediction Regulation Case
With federal appeals courts ruling differently, 39 states asked SCOTUS to hear the prediction market case this week. The bipartisan coalition, led by Ohio Attorney General Andy Wilson, included 38 other states and Washington D.C. in support of New Jersey’s petition to appeal the Third Circuit’s ruling in favor of Kalshi.
The question that New Jersey’s writ of certiorari poses is simple: Does CEA preempt state law? The attorneys believe that all gambling regulation should be within the powers of the states.
There have been three Circuit Court of Appeals rulings on the topic of state and federal regulation for prediction markets. The most recent came from the Sixth Circuit, who denied Kalshi a preliminary injunction in Ohio and reversed an injunction in Tennessee.
A ruling from the Ninth Circuit in August unanimously approved (3-0) an April decision to dissolve a Kalshi injunction in Nevada. The ruling allowed the Nevada Gaming Control board to impose their state gambling laws on Kalshi and other prediction market operators offering sports event contracts in Nevada.
Those rulings differ from the Third Circuit’s ruling in April, when the court ruled New Jersey couldn’t regulate Kalshi sports event contracts and ruled they were indeed “swaps” under the CEA definition. With circuits disagreeing on if sports event contracts are swaps and if states can regulate these entities, the NFL and state attorneys want SCOTUS to decide.
