Confirmed: As of 1 November 2026, the U.S. Supreme Court has not agreed to hear a prediction-markets case and has issued no ruling on whether states may regulate sports event contracts. New Jersey has asked the Court to review a federal appeals court decision favouring Kalshi, in Flaherty v. KalshiEX, LLC, No. 26-299, with Kalshi’s response due 7 December 2026, after an extension granted on 30 October 2026. Reported, not yet decided: that petitions concerning Nevada are also before the Court, and that the justices could ask the Solicitor General for the government’s view first. This article explains the prediction markets Supreme Court case, Kalshi, Polymarket and the regulation fight as what could happen, not what has happened. Nothing here is legal or financial advice.
The Prediction Markets Supreme Court Case: Kalshi, Polymarket and the Question Before the Court
The question is narrow: whether the Commodity Exchange Act — giving the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over swaps traded on regulated exchanges — preempts state gambling law for a sports event contract listed on a CFTC-regulated exchange. Kalshi says yes: its contracts are swaps and state sports-wagering laws cannot apply. New Jersey, backed by dozens of other states, the National Football League, tribal organisations and gambling regulators, says no: a sports wager does not become a financial derivative because an exchange lists it.
A ruling for Kalshi would not legalise sports betting everywhere, and a ruling for New Jersey would not shut prediction markets down. The fight is about who regulates sports contracts and which rules apply — licensing, consumer protection, taxation, age limits, responsible-gambling duties. Non-sports markets, on elections and economics, are part of the same business, but the litigation has centred on sports, where the overlap with licensed sportsbooks is direct. The case is among the major questions this term, covered in our Supreme Court term 2026–27 explainer. The rulings so far were preliminary injunctions. A grant of review would mean full briefing, argument most likely in the spring, and a decision by late June 2027. A denial would leave conflicting rulings standing. Review is discretionary: four justices must vote to grant it.
How Prediction Markets Work — and What the Price Really Means
A prediction market trades contracts on future events. Each contract asks one yes-or-no question and pays $1 if the event happens, nothing if it does not. A “Yes” contract at 62 cents implies roughly a 62% chance; the matching “No” trades at about 38 cents, so the two always add up to $1. Prices move with supply and demand as news arrives, and traders can sell before the event resolves. Unlike a sportsbook, the exchange matches traders and takes a fee.
Kalshi has been a CFTC-regulated exchange since November 2020, designated as a contract market, trading in dollars. Polymarket began as a crypto-based market outside the U.S. system; the CFTC fined it $1.4 million in 2022 for offering event contracts without registering. In July 2025 it bought a CFTC-licensed exchange for a reported $112 million, received no-action relief in September 2025, and relaunched in the United States in December 2025. Both list politics, economics, sports, culture and weather markets, with availability varying by state. Two cautions apply: a price reflects the people willing to trade, not a measurement of the world, and fees make it an approximation, not an exact probability.
The Circuit Split: Three Appeals Courts, Two Answers
The Third Circuit ruled for Kalshi. On 6 April 2026, a divided panel (2–1) held Kalshi’s sports contracts likely qualify as swaps and federal law likely preempts New Jersey’s sports-wagering statutes, affirming an injunction keeping Kalshi operating in New Jersey, Pennsylvania and Delaware. New Jersey’s petition, filed 2 September and docketed 8 September as No. 26-299, asks the Supreme Court to reverse it. The petitioners are Mary Jo Flaherty, interim director of the New Jersey Division of Gaming Enforcement, and Jennifer Davenport.
The Ninth Circuit ruled against Kalshi. On 28 August 2026, a unanimous panel held Nevada’s gaming laws apply to sports event contracts and upheld the dissolution of an injunction protecting Kalshi from Nevada enforcement. The Ninth Circuit covers California, Nevada, Washington, Oregon, Idaho, Arizona, Alaska, Hawaii and Montana.
The Sixth Circuit leaned the same way as the Ninth. On 25 September 2026, it upheld the denial of Kalshi’s injunction request in Ohio and vacated an injunction covering Tennessee. The score is two circuits to one against Kalshi, although all three rulings were preliminary. Petitions from Robinhood Derivatives (No. 26-338, filed 10 September 2026) and Crypto.com’s exchange, North American Derivatives Exchange (No. 26-344, filed 11 September 2026), are also pending; Nevada’s responses are due 13 and 16 November 2026 respectively. Verified from docket reporting is the support for New Jersey: briefs from Ohio with 38 other states and the District of Columbia, the NFL, the American Gaming Association, 145 Indian tribes and tribal organisations, former CFTC Chairman Gary Gensler and former Senator Christopher Dodd. Tribal gaming is a major source of tribal government revenue, and tribes argue unlicensed sports contracts threaten it.
State Versus Federal Regulation, and What the CFTC Did in October
The case turns on preemption — federal law prevailing where it conflicts with state law or occupies a field — and on the definition of a “swap”: a contract whose value depends on an underlying event, traded on a regulated exchange and centrally cleared. If a sports contract is a swap, CFTC jurisdiction follows. If it is a wager, state gambling power applies.
The states argue form should not defeat substance: a contract paying $1 if a team wins is a sports bet. States license sportsbooks, tax revenue, impose age and location checks and fund problem-gambling services. The NFL argues sports integrity depends on regulated markets cooperating with leagues and regulators. Kalshi argues Congress created a national derivatives market: prices are public, manipulation is policed as market manipulation, and the exchange stands neutral. It also cites hedging uses beyond speculation. The Court would choose which regulator’s rules govern, not between regulation and none.
On 9 October 2026 the CFTC issued two documents. An interim final rule (RIN 3038-AF81) excludes “casino-style gambling products” from the swap definition: a wager taken by a licensed sportsbook or casino, acting as the house and not traded on an exchange, is not a swap. A proposed rule (RIN 3038-AF82) would add event contracts — “including those based on sports-, politics-, cultural, and weather-related events” — expressly to the swap definition. Both carry 30-day comment periods; the interim rule takes effect on Federal Register publication, the proposal only if finalised. Chairman Michael S. Selig said: “Casino-style gambling products are not derivatives.” Critics say an agency cannot settle by rulemaking a statutory question before the courts. Either way, the rulemaking does not bind the Supreme Court.
Texas Senate Odds, and Why Odds Are Not Polls
Prediction-market odds are now quoted alongside polls, including for the Texas Senate contest. Our explainer on the Texas Senate race, its candidates and its polls sets out who is running and what surveys say. Market prices add different information, and confusing the two is the easiest mistake here. A poll asks a sample whom they intend to vote for, with a margin of error. A market price measures what traders will risk on an outcome, and can move on a late endorsement faster than the next survey.
But odds are not polls. Traders are not voters, and many cannot vote in the state concerned. Markets can be thin, so one large order can move a price. Markets can be manipulated or traded on non-public information; the CFTC’s enforcement leadership raised insider trading in prediction markets as a priority in March 2026. And markets answer a different question — “what will happen?”, including turnout and the chance polls are wrong — not “who would you vote for?” Read both together, sceptically. Agreement is meaningful but not proof. Disagreement is a reason to ask who is trading, how much volume exists, and what the resolution rules say counts as winning. Markets are a useful signal, not a vote count in advance.
What Happens Next, and What It Means for Users
Kalshi’s response is due 7 December 2026, after the Court granted a 28-day extension on 30 October 2026. After any reply, the justices consider the petition at conference. The outcomes are a call for the Solicitor General’s views, delaying a decision by months; a grant of review, with a decision by late June 2027; or a denial, leaving the split in place. The Court could also hold the petitions while CFTC rulemaking proceeds. Each is a recognised path, not a prediction; the publish-day re-check should update this section if the Court has acted after 1 November.
For users, availability depends on state, platform and current litigation. Anyone trading should check the platform’s terms, local rules and resolution rules — the fine print deciding what determines the outcome. If taken, the case will clarify one boundary, between federal derivatives law and state gambling law. It will not settle consumer protection, insider trading on political information, or whether markets on sensitive events should exist: the beginning of the regulatory settlement, not its end.
Frequently asked questions
Has the Supreme Court already decided the prediction markets case?
No. As of 1 November 2026, no case has been granted review and no ruling has issued. New Jersey’s petition in Flaherty v. KalshiEX, No. 26-299, was pending, with Kalshi’s response due 7 December 2026 after an extension granted 30 October 2026. Reports of a decline conflict with docket reporting.
What is the difference between Kalshi and Polymarket?
Kalshi is a CFTC-regulated U.S. exchange since November 2020, trading in dollars. Polymarket began as a crypto-based market outside the U.S. system, was fined by the CFTC in 2022, and returned to the U.S. in 2025 through a CFTC-licensed exchange it acquired. Both trade yes-or-no contracts priced 1–99 cents, paying $1 if the event happens.
Are prediction markets gambling?
Legally, that is what the courts are deciding. Functionally, they resemble both gambling and derivatives trading. The CFTC’s October 2026 position is that exchange-traded event contracts are swaps, while wagers taken by a licensed sportsbook as the house are gambling products outside its jurisdiction.
Why do prediction-market odds differ from polls?
Polls survey a sample about voting intentions; markets aggregate traders’ bets. Traders are not a representative sample, markets can be thin, and markets price in turnout and late events. Agreement is informative; disagreement is a reason to ask questions.
Updated: 1 November 2026. Docket position, CFTC rulemaking status and market availability are as of this date; the Supreme Court docket for No. 26-299 was re-checked 1 November 2026 and shows the response due 7 December 2026, with no grant or denial confirmed.
SOURCES
- U.S. Supreme Court, Docket No. 26-299, Flaherty v. KalshiEX, LLC — https://www.supremecourt.gov/docket/docketfiles/html/public/26-299.html
- U.S. Supreme Court, Amicus Brief of the Casino Association of New Jersey, No. 26-299 — https://www.supremecourt.gov/DocketPDF/26/26-299/429088/20261009130833025_26-299%20acTheCasinoAssociationOfNewJerseyInc.pdf
- CFTC, Release 8478-22 (Polymarket $1.4 million penalty, 3 January 2022) and Release 9113-25 (QCX no-action letter, 3 September 2025) — https://www.cftc.gov/PressRoom/PressReleases/8478-22
- DeFi Rate, “Prediction Market Litigation Tracker” — https://defirate.com/prediction-markets/legal/
- The iGaming, “NFL Kalshi Supreme Court Brief,” 12 October 2026 — https://theigaming.eu/2026/10/12/nfl-kalshi-supreme-court-brief/
- TokenPost, “NFL Urges Supreme Court To Let States Regulate Kalshi Sports Bets,” 8 October 2026 — https://www.tokenpost.com/news/regulation/28458
- Startup Fortune, “New Jersey asks Supreme Court to decide if Kalshi answers to states” — https://startupfortune.com/new-jersey-asks-supreme-court-to-decide-if-kalshi-answers-to-states/
- BetG8, “The CFTC wrote casino bets out of the swap definition,” 10 October 2026 — https://www.betg8.com/articles/cftc-casino-gambling-exclusion-swap-rule-event-contracts.html
- JD Supra, “CFTC Draws the Line,” October 2026 — https://www.jdsupra.com/legalnews/cftc-draws-the-line-interim-final-rule-6353345/
- Unchained, “CFTC Writes Prediction Markets Into Swap Rules,” 12 October 2026 — https://unchainedcrypto.com/cftc-writes-prediction-markets-into-swap-rules-and-carves-sportsbooks-out/
- UltraGambler, “Prediction Markets Explained: Kalshi Vs Polymarket” — https://www.ultragambler.com/prediction-markets/
- American Century, “What Are Prediction Markets and How Do They Work?” — https://www.americancentury.com/insights/prediction-markets-explained/?utm_activ=ao&utm_bunit=b2c&utm_channel=pfsco&utm_audienc=all-indiv&utm_invest=na&utm_program=regular
