NFL to Supremes: CFTC Should Punt Football "Swaps" to State Regulators
Commentary by Mark Highman
The National Football League asked the U.S. Supreme Court to take up New Jersey's case against KalshiEX, LLC, arguing that wagers on football games placed through federally registered exchanges should be governed by state gambling laws, not by the CFTC.
In an amicus brief, the NFL said that more than half of all prediction market trading on the first Sunday of the 2026 season, $1.8 billion out of $3.3 billion, was tied to its games. It urged the Justices to settle the issue "before another NFL season goes by."
The league said the CFTC and prediction market exchanges have taken a "laissez-faire approach" to football betting. According to the brief, they have turned down NFL requests to ban bets that a single player, coach, or referee could easily rig. The league said they have also refused to adopt the minimum betting age of 21 that most states impose. The NFL also pointed to staffing: the CFTC has 543 employees for the whole country, while Nevada's and Pennsylvania's gaming regulators each have close to 400 people.
On the law, the NFL argued that Congress meant the word "swap" in the 2010 Dodd-Frank Act to cover tools for hedging existing financial risk, not bets that create risk for gamblers. The league contended that the broader reading endorsed by the U.S. Court of Appeals for the Third Circuit raises constitutional questions about Congress's power over gambling within a state's borders. It also said that this reading runs into the "major questions" doctrine because it would quietly hand regulation of a multibillion-dollar industry to a federal agency. The NFL added that if the Justices rule against New Jersey, the league would push the CFTC, the exchanges, and Congress for stronger safeguards before the 2027 season.
Kalshi has not yet answered the petition. Its lawyers asked for 30 more days, citing other previously scheduled professional obligations. The Supreme Court granted the request, so Kalshi's response is now due November 9, 2026.
Commentary
Appeals courts are split on both what counts as a swap and how far federal law preempts state law.
In the Third Circuit ruling, a divided panel held that Kalshi's sports contracts are swaps. The court reasoned that the relevant event need only be “associated with a potential financial, economic, or commercial consequence,” and that game outcomes can affect sponsors, advertisers, TV networks, and franchises. It found that federal law preempts New Jersey's gambling laws for contracts traded on CFTC-regulated exchanges. Judge Jane Roth dissented, calling Kalshi's products sports gambling.
In a Nevada case, the Ninth Circuit court held that the contracts likely are not swaps because ripple effects on businesses are not enough; the event itself must be "inherently" tied to a financial consequence. The court said Kalshi's reading would raise a "major-questions problem." That doctrine targets agencies claiming highly consequential power beyond what Congress reasonably understood it had granted. Still, the court agreed that federal law preempts state regulation of contracts that truly meet the swap definition, such as weather or interest rate swaps, when they trade on CFTC-regulated exchanges.
The Sixth Circuit court agreed in an Ohio and Tennessee case that the contracts are not swaps. It held that even if they were swaps, federal law would not preempt the two states' gambling laws. The court read the CFTC's "exclusive jurisdiction" narrowly, covering only direct regulation of how exchanges are licensed and run. It said state gambling laws regulate betting, an area states have long controlled, and only incidentally burden exchanges.
Besides the NFL, 39 states and the District of Columbia, a group of 145 Indian tribes and tribal organizations, former CFTC Chair Gary Gensler, former Senator Christopher Dodd (D-CT), the American Gaming Association, and The Casino Association of New Jersey have all filed briefs urging the Supreme Court to hear New Jersey's appeal.