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Prediction markets are one circuit split away from a binary Supreme Court outcome
A PredictIt executive says the CFTC-versus-states fight could reach the Supreme Court as soon as November, with a ruling next June. That is not a glide path. It is a coin flip with a date on it.
The Investor · Invest desk
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What happened
- Flip Pidot, chief strategy officer at PredictIt and a prediction market executive with nearly 20 years of experience, told Fortune that the CFTC and state regulators are battling over who polices prediction market platforms, a conflict that could force the Supreme Court to settle the question before the end of next year.
- Pidot expects a circuit split to occur as soon as November and, if the Supreme Court chooses to hear the case, a ruling would likely come the following June. He first made the remark at a prediction markets event in New York City that week.
- Pidot said: "When you have a high-stakes intergovernmental conflict where a federal regulator like the CFTC is opposed in their position to a supermajority of state attorneys general... then that can get the Supreme Court's attention."
- In April, the U.S. Court of Appeals for the Third Circuit sided with Kalshi in its dispute with New Jersey, finding that federal commodities law overrode the state's gambling laws for the platform's contracts, and affirmed a lower-court decision allowing Kalshi to continue operating in the state.
- Earlier this year a Ninth Circuit panel heard arguments over Nevada's effort to enforce its gambling laws against event contract platforms, and the judges appeared skeptical of the arguments made by three prediction market companies.
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Why it matters
Flip Pidot, chief strategy officer at PredictIt and a nearly 20-year veteran of the industry, told Fortune that the fight between the Commodity Futures Trading Commission and state regulators over who polices event contracts could force the Supreme Court to settle the question before the end of next year [3]. For anyone underwriting a prediction-market venue, that reframes the risk: the outcome is not a rulemaking to be negotiated but a single ruling that either preempts state gambling law or does not.
The mechanics are already in place. In April, the Third Circuit sided with Kalshi against New Jersey, finding that federal commodities law overrode the state's gambling laws for the platform's contracts, and affirmed the lower court decision letting Kalshi keep operating there [5]. Since then the traffic has run the other way. A Ninth Circuit panel heard arguments over Nevada's attempt to enforce its gambling laws against event contract platforms, and the judges appeared skeptical of the arguments made by three prediction market companies [1]. Over the past two months Kalshi has appealed to the Second Circuit after adverse rulings by federal judges in New York and Connecticut [2]. One appellate loss creates a circuit split that would likely pull in the Supreme Court, and Pidot expects that as soon as November, with a decision the following June if certiorari is granted [6][12].
Count the board rather than the press releases: one favourable circuit ruling against three live appellate proceedings and two district court losses already on the record [11]. And note the exposure window. A November split and a June ruling leaves roughly seven months in which venues take customer money under law that the Court has agreed is unsettled [16].
The preemption argument is the whole asset. The CFTC, more accommodating to the platforms under the Trump administration, argues that event contracts traded on CFTC-registered exchanges fall under its exclusive authority, and that the Commodity Exchange Act gives it sole power over swaps and futures, preempting state law [7][10]. States counter that contracts tied to sports are unlicensed wagering [7]. Stephen Piepgrass, a prediction markets lawyer and partner at Troutman Pepper Locke, told Fortune that other factors make review nearly inevitable, chiefly the constitutional question [8]. In 2018 the Supreme Court held that the federal government could not stop states from allowing sports betting because doing so violated the Tenth Amendment, leaving each state to decide [9]; states now argue the CFTC is taking back the power that decision handed them [10].
The money on the other side of the trade is not abstract. The platforms threaten casinos and disrupt Native American economies that lean on gaming revenue, while companies and institutions explore the same contracts as hedging tools [13], and the stakes run highest in states most dependent on gaming receipts [15]. Piepgrass called it "top of mind for so many Americans" with "a huge potential impact on the economy" [14].
One caveat worth pricing: the November-to-June timeline is one executive's forecast, made at a prediction markets event in New York, and he works for a platform [12][4].
Watch the Ninth and Second Circuits, not Washington. The trigger is a single opinion against Kalshi, and it sets the clock on everything downstream: cert timing, the operating window, and whether state licences suddenly become the only route to market.