Prediction Markets Head Toward Supreme Court as 30+ States File Amicus Briefs

The legal fight over sports prediction markets is heading toward the Supreme Court. More than 30 states have filed amicus briefs backing state authority to regulate event contracts as gambling.

Kalshi, the prediction market platform that won a federal court ruling allowing political event contracts in 2024, now faces enforcement actions in Nevada, New Jersey, and Maryland. State regulators argue that sports-related contracts are bets on game outcomes dressed up as financial instruments, and that they amount to unlicensed gambling under state law.

Kalshi has filed lawsuits in each state to block enforcement, arguing that federal commodities law preempts state gambling statutes. Some courts have granted temporary relief. Others have declined.

DraftKings and FanDuel entered the prediction market space in December, launching apps in dozens of states where they hold no sports betting licenses. Both companies believe they are not risking their state gaming licenses. Nevada disagreed: Flutter withdrew its application and DraftKings pulled its license there over the companies' prediction market plans.

"We see an eventual Supreme Court showdown with the best-case mid-2026 timing, though some congressional fix is also possible," wrote Barry Jonas, analyst at Truist Securities.

The core legal question is straightforward. Are sports event contracts financial instruments regulated exclusively by the Commodity Futures Trading Commission, or are they gambling products subject to state licensing, taxes, and consumer protections?

The stakes are large. If federal preemption holds, prediction market operators can offer sports contracts nationwide without paying state gaming taxes or meeting state responsible gambling requirements. If states win, DraftKings and FanDuel may have to exit prediction markets in jurisdictions that do not separately authorize them, or face the same enforcement actions now hitting Kalshi.

Coinbase has also filed lawsuits against Connecticut, Illinois, and Michigan, challenging state actions against its sports-related event contracts.

The regulatory uncertainty has not slowed expansion. Analysts project that prediction market trading volume could reach $1 trillion annually by 2030, assuming legal clarity emerges in operators' favor.