The NFL says a contract on a game is a bet

The National Football League on Thursday asked the US Supreme Court to hear New Jersey's challenge to a ruling that placed Kalshi's sports contracts under exclusive federal oversight, arguing that such contracts are not "swaps" under the Dodd-Frank Act and can be regulated by the states, according to its amicus brief in Flaherty v. KalshiEX, LLC, No. 26-299. The Block reported the filing the same day. The brief backs the petitioners at the certiorari stage, and the Court has not agreed to take the case.

The petition was filed on 2 September by Mary Jo Flaherty, interim director of the New Jersey Division of Gaming Enforcement, and Jennifer Davenport, according to the Court's docket. It seeks review of a Third Circuit decision dated 6 April. The NFL's brief says that court held Kalshi's sports-related event contracts fall within the Commodity Futures Trading Commission's exclusive jurisdiction over swaps traded on a designated contract market, so that state laws are pre-empted. It says the Sixth Circuit, on 25 September, and the Ninth Circuit, on 28 August, "squarely disagreed".

The league's argument is textual. It says Dodd-Frank's definition of a swap reaches only instruments created and used for hedging pre-existing risk, "not wagers that create risk primarily for gambling purposes". It adds that a broad reading of the term raises Commerce Clause and major-questions problems. The brief's counsel include the NFL's Theodore Ullyot and Douglas Paoletti and, at Torridon Law, William P. Barr and Cody Reaves.

The league's position is more conditional than the headline version. The brief says that "given the current landscape", the NFL believes the Sixth and Ninth Circuits got it right. It also says that if the Court sided with the Third Circuit, the NFL could redouble its efforts to persuade the CFTC, the exchanges and Congress to adopt stronger integrity and consumer-protection measures before the 2027 season. Its stated objection is as much to the regulator's current approach as to its jurisdiction.

On that point the brief is pointed. It describes the approach of the CFTC and the exchanges as "laissez-faire". It says they have declined to adopt the league's list of prohibited wagers, and that state authorities generally set a minimum betting age of 21, so that in almost every state an 18-year-old could not bet on a game through Caesars Sportsbook but could through Kalshi. It also says the CFTC has 543 employees covering the whole country, citing an agency memorandum, against close to 400 each at the Nevada and Pennsylvania gaming regulators. By our arithmetic, those two states have roughly 800 between them.

The brief also puts a number on the market. It says that on the first Sunday of this season $1.8bn of $3.3bn in prediction-market trading volume related to the NFL, which is by our arithmetic about 55 per cent. The Block rounded the league's figure to "nearly $2 billion"; the brief itself says $1.8bn. The figures are the league's own and were not independently verified.

Kalshi rejected the league's position, according to The Block, saying it prioritises market integrity, that the CFTC already polices sports-related markets and that federal oversight is more consistent than a state-by-state approach. "It is extremely telling that the sports league which has most forcefully advocated for federal regulation is essentially saying 'this ain't it,'" the gaming attorney Daniel Wallach said on X, The Block reported, adding: "An important amicus brief that meaningfully increases the chances of a cert grant." The Block also noted that MLB and the NHL have agreements with prediction markets, which puts the NFL at odds with them.

Reason noted that the NFL has official partnerships with the sportsbooks DraftKings, FanDuel and Fanatics, and argued that this gives the league a financial interest in state control. The brief does not name those companies. Kalshi's response is due on 9 November, after an extension from 8 October that the Court granted on 22 September. The docket, whose latest entry is dated Friday, lists 11 amicus filings by our count, including from Ohio and other states, former CFTC chairman Gary Gensler, former senator Christopher Dodd, the American Gaming Association and 145 tribes and tribal organisations. It lists no conference date.

The question matters because it decides who supervises markets whose integrity is already being tested. The Wall Street Journal reported on Friday, as The Block relayed on Saturday, that Kalshi was investigating three bets that correctly predicted the choice of Katie Zacharia as White House press secretary before it was announced. The bets totalled about $173 and stood to pay about $9,600, and a Kalshi spokesperson confirmed the inquiry to the Journal and declined to comment further. That case involves a political market rather than a sporting one. The NFL's brief argues that the present arrangement gives "unscrupulous actors" more room to "trade on inside information".

The CFTC is meanwhile writing its own rules for retail crypto trading, as Komposite reported in its coverage of the agency's 5 October notice, and event-contract venues have been pitching themselves to institutional hedgers. Whether sports contracts belong in that federal system or in state gambling law is the question the Court is being asked to take up. Kalshi's response, due on 9 November, is the next scheduled filing.