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If you’ve encountered any non-political television ads recently, chances are you’ve seen one for Kalshi. At its simplest, Kalshi is a prediction-market app on which folks can bet on whether particular things will happen (e.g., who will win a football game) and get paid if they’re right. The messy and fraught politics of Kalshi, sports betting, and prediction markets aside, Kalshi has also sparked a ton of litigation over whether it is subject to state gambling and sports-betting laws—including everything from outright bans to taxes on the income it receives from the transactions it facilitates (and, sometimes, participates in).
That litigation reached a new level late last month, when Utah prosecutors charged Kalshi and its two co-founders with felonies. Those charges came a day after the Trump administration, through the Commodity Futures Trading Commission (CFTC), sued Utah to keep it from enforcing its gambling laws against the company. And all of this is unfolding against the backdrop of a 2-1 (and growing) circuit split on the central questions these cases present, three pending cert. petitions in two of those circuit cases, and the increasing likelihood that the Supreme Court will (and will have to) step into this hornet’s nest, perhaps as soon as this term.
Today’s “Long Read” tries to provide a concise and accessible overview of what, exactly, Kalshi is doing that’s different from other betting apps; the legal questions those differences raise; where the most important Kalshi cases stand; and what’s at stake when (not if) the Supreme Court weighs in.
All of that below. But first, the more immediate SCOTUS news.
On the Docket
The Merits Docket
Besides the first week of the November argument session, the only public news on the merits docket last week was Friday’s unexpected grant of certiorari in a dispute about whether the automatic stay in bankruptcy proceedings overrides an agreement to arbitrate when one of the parties to that agreement is the debtor in the bankruptcy.
The oddity of the grant isn’t that the Court took the case; it’s that it took it on Friday, rather than in today’s regular Order List (we usually see Friday grants only as we get closer to the January cut-off date for cases to be argued this term). My best guess is that, for whatever reason, the Court wants to hold argument in the case (Goldman Sachs Bank USA v. Brown) in February, so granting on Friday rather than Monday will require less of an acceleration of the ordinary (17ish-week-long) merits briefing schedule. But, as with so much of the Court’s certiorari process, we can only speculate.
One thing that’s clear: even compared to recent terms, the Court is pretty far behind in adding cases to the “merits” docket. Counting consolidated cases as one, Brown is only the 34th merits case currently on the OT2026 docket. At the same point last term (OT2025), the Court had already granted 43 cases, and it had granted 44 by this point in OT2024. Either the justices are going to have to hustle to catch up, or we’re heading for even fewer rulings on the merits docket this term than the (historically low) mid-50s totals we’ve seen each term since COVID.
The Emergency Docket
Even if it was quickly overtaken by events, the biggest news out of the Court last week was Monday afternoon’s denial of emergency relief in United States v. California—the case in which the Trump administration was seeking to force California to segregate mail-in ballots from as many as 20,000 people based on unsubstantiated (and math-light) allegations that some of them were non-citizens. As I suggested on social media, the application itself read like the Solicitor General filed it under protest, and the Court responded in kind, denying it with no public dissent and without even calling for a response—something I’ve never seen before with respect to a Justice Department application. Whether any of this affects the Solicitor General’s credibility with the justices remains to be seen—although at some point, it really ought to…
On Thursday, the Court denied a pair of emergency applications from Florida death-row prisoner Jesse Guardado (with no public dissent from either ruling). Guardado was executed later Thursday night.
Meanwhile, the Court has still not acted on the two highest-profile pending emergency applications—the Trump administration’s request for emergency relief in the border wall case, and the K.M.K. application seeking to require Washington State to allow a public high school wrestler with female genetic markers to be “exempted” from competing against transgender female athletes. The K.M.K. application has been fully briefed since October 15, but it’s possible the justices were waiting for the results of Tuesday’s elections, in which Washington State voters approved “Initiative 638,” which requires schools to “prohibit biologically male students from competing with and against female students” in sports with separate team or individual competitions for male and female students. Although the applicant in K.M.K. has urged the justices to act before that measure goes into effect in December, the Court may be content at this point to run out the clock—since the broader legal dispute will shortly be mooted (in Washington, anyway).
The Week Ahead
Turning to this week, we expect a full Order List at 9:30 a.m. ET. It’s the first in three weeks, so it’s likely to contain lots of denials of certiorari along with the potential for additional grants and separate writings. The November argument session resumes at 10:00 a.m. with argument in Nielsen v. Watanabe—a quietly important case in which the Court has been asked to further limit (if not altogether eliminate) “Bivens” suits for damages against federal officers who violate the Constitution. With the assistance of Brandon Boxler and his colleagues at Klein Thomas Lee & Fresard, I filed an amicus brief in support of the respondent in Nielsen, and have written here at length about how the Trump administration has repeatedly illustrated the costs of Bivens’s disappearance. But having personally lost one of the Court’s recent Bivens cases, I’m not optimistic.1
Miscellaneous
On Monday afternoon, the Court released the oral argument calendar for January 2027—with only six cases scheduled across five days of argument, none of which are among the highest-profile disputes the justices will hear this term. Even counting Friday’s grant, only seven granted cases remain unscheduled, and they will presumably make up the February calendar. Combined with the slow pace of grants discussed above, that means most of the cases the Court has yet to add will be argued in March and April—so we’re heading for another back-loaded term, with many of the biggest cases argued late. That will once again leave the justices less time than usual to resolve the most significant disputes on their docket.
The other big Court-related story last week was Jodi Kantor and Michael Schmidt’s scoop for the New York Times that the Department of Justice is stepping up its investigation into the May 2022 leak of Justice Alito’s draft majority opinion in Dobbs. The story reports that “[t]he investigation has ramped up in recent weeks as prosecutors have sent grand jury subpoenas for testimony and sought information from people who worked at the court at the time of the leaks.” But it also notes that “[i]t is not clear what law prosecutors believe might have been broken as a result of the leak, or whether investigators have developed new evidence pointing to a potential suspect.” One possibility is that there’s concern that some of the relevant statutes of limitation will expire next spring (rather than any new evidence), but I remain unpersuaded that the leak was illegal at all. And suffice it to say, if any of those subpoenas were directed to the justices themselves (something the story does not suggest), that would be quite an escalation of interbranch tension—at a time when the Court may feel newly insulated against attacks from the executive branch.
The One First “Long Read”:
“Bet on Football Legally”
Kalshi isn’t a casino or a licensed sportsbook. It’s a “designated contract market,” or “DCM,” which is an exchange registered with the CFTC—the federal agency that oversees futures and other derivatives. (There’s a Trading Places joke here somewhere.)
Kalshi’s exchange lists “event contracts.” Each one identifies an event, describes what it pays depending on the outcome, and expires on a set date. A contract’s price rises and falls with the market’s sense of how likely that outcome is. For years after the CFTC approved Kalshi as a DCM in 2020, Kalshi’s contracts mostly involved things like elections, weather, and box-office receipts.
In January 2025, Kalshi began offering contracts on sporting events. It did so by “self-certifying” them to the CFTC. Under federal law, self-certification lets an exchange list a new contract without advance approval; the contract stays up unless the agency acts. To date, the CFTC hasn’t acted.
From the user’s side, the result looks a lot like DraftKings or FanDuel. When the Ninth Circuit put a Kalshi screen next to a licensed sportsbook’s screen for the same NFL game, the two were nearly identical. Users can bet point spreads and over/unders, and they can build parlays (single bets that combine several outcomes), which Kalshi calls “combos.” Kalshi has openly advertised itself as “the first app for legal sports betting in all 50 states.” In 2025, sports accounted for more than 90 percent of its trades and 95 percent of its revenue.
Kalshi has stressed that, unlike a sportsbook, it isn’t the counterparty to any trade, it doesn’t set odds, and it doesn’t profit when customers lose. That’s the heart of its claim to be something other than a sportsbook. But as the Ninth Circuit suggested in one of the cases I’ll summarize below, these may well be “distinctions without differences,” since a Kalshi affiliate is a major market maker on the exchange (and, thus, is often a counterparty to these contracts). Either way, the legal stakes are clear. A licensed sportsbook pays state taxes and follows state rules. Kalshi says it answers only to the CFTC—and is thus exempt from both. As its spokesperson put it, a nationwide exchange “cannot be regulated by 50 different regulators.”
The Legal Question
Kalshi’s argument depends heavily on two provisions of the Commodity Exchange Act (CEA), as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. One gives the CFTC “exclusive jurisdiction” (meaning that it, and no one else, gets to regulate) over “swaps” traded on a designated contract market. In the financial world, a swap is traditionally a deal in which two parties trade payments tied to something like interest rates or commodity prices, often to hedge against risk. But the statute’s definition is broader: it includes a contract that pays out based on an event “associated with a potential financial, economic, or commercial consequence.” If sports contracts fit that definition, Kalshi says, then the states can’t touch them.
Kalshi’s textual argument isn’t frivolous. Even the dissenting judge in the Third Circuit case conceded that a plain reading of the definition suggests Kalshi’s contracts “fit comfortably” within it. The trouble is that, on that reading, nearly any event has some economic consequence for someone—even, as Judge Roth noted in her Third Circuit dissent, a friendly neighborhood ping-pong match. That’s why the courts that have ruled against Kalshi keep asking where the limiting principle is (that is, what, if anything, wouldn’t count as a swap)—and whether Congress could ever have intended to give the CFTC such broad (and preemptive) authority.
But even if Kalshi’s contracts are “swaps” within the meaning of federal law, a second question remains: does the CFTC’s “exclusive jurisdiction” actually
”preempt” state law when it comes to the regulation thereof? The Constitution’s Supremacy Clause makes valid federal law “the supreme Law of the Land.” So when a federal statute and a state law collide, the federal law wins and the state law gives way. That can happen in three main ways. Congress can say so expressly (“express” preemption). It can regulate a subject so thoroughly that there’s no room left for the states (“field” preemption). Or a state law can clash with federal law, either because it’s impossible to obey both or because the state law gets in the way of what Congress was trying to accomplish (“conflict” preemption). Kalshi has pressed all three theories. But courts have long started from the premise that Congress doesn’t lightly override the states, especially in areas, like gambling, that the states have traditionally regulated.
Here, the federal statute’s own savings clauses preserve some state authority. And the CEA’s “Special Rule” lets the CFTC bar event contracts involving “gaming” or activity that’s illegal under state law. And the CEA’s “Special Rule” lets the CFTC bar event contracts involving “gaming” or activity that’s illegal under state law. The current version of the CFTC’s own Rule 40.11 even says that exchanges “shall not” list gaming contracts, although the CFTC has proposed amending that rule to cut the other way.
Kalshi’s own history doesn’t help. In earlier litigation over election contracts, it told the D.C. Circuit that a contract on the outcome of a sporting event is “the classic example” of a gaming contract. The states have also leaned heavily on the Supreme Court’s 2018 decision in Murphy v. NCAA, in which the Court said that Congress “can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own.” Whatever else might be said about the CEA, the CFTC, and the “swaps” argument, it’s very hard to argue that Congress has regulated sports gambling “directly” through Dodd-Frank’s definition of “swap.”
Where Things Stand
Kalshi’s push into sports has produced dozens of lawsuits—some brought by Kalshi and some against it—and I won’t try to cover them all. The key cases for present purposes are three federal appeals court decisions, from the Third, Sixth, and Ninth Circuits, respectively.
In April, a divided Third Circuit panel upheld an injunction that bars New Jersey from enforcing its gambling laws against Kalshi (i.e., it sided with Kalshi). The majority held that the contracts are swaps and that federal law preempts the state’s laws. In August, a unanimous Ninth Circuit panel ruled the other way in Kalshi’s case against Nevada (and two consolidated cases involving other companies). And on September 25, a unanimous Sixth Circuit panel ruled against Kalshi in the Ohio and Tennessee cases. It held that the event must be “inherently” associated with a financial consequence to fall within the federal definition of a “swap.” And it added that, even if the contracts were swaps, the CEA wouldn’t preempt the states’ laws. Appeals are also pending in numerous other circuits. And the rulings in the Third and Ninth Circuit cases are currently the subject of three separate petitions for certiorari—from New Jersey in the Third Circuit case, and from Robinhood and “OG.com” (whose challenges to Nevada law were consolidated with Kalshi’s) in the Ninth Circuit case.
The federal government has taken Kalshi’s side, and not quietly. Under Chairman Michael Selig, the CFTC filed an amicus brief supporting Kalshi in the Ninth Circuit. And as noted above, late last month it sued Utah—its tenth suit seeking to block a state from enforcing its gambling or sports-betting laws against DCMs. It has also proposed a rule that would write sports event contracts expressly into the definition of “swap.” But that’s only a proposal—and, even if it’s adopted, it conflicts with how both the Sixth and Ninth Circuits have interpreted the underlying statute. For 40 years, under the Supreme Court’s 1984 decision in Chevron, courts generally deferred to an agency’s reasonable reading of an ambiguous statute. But in Loper Bright (2024), the Court overruled Chevron. Now judges decide for themselves what a statute means, and an agency’s view counts only as much as its reasoning persuades. So even a final CFTC rule wouldn’t bind the courts on what the word “swap” means.
The Politics
These cases don’t follow the usual partisan lines. Red and blue states have joined forces against the prediction markets. Ohio, 38 other states, and the District of Columbia all filed a joint amicus brief supporting both certiorari and New Jersey’s position on the merits. Indeed, some of the most aggressive state enforcement actions to date, including those in Utah, Ohio, and Tennessee, have been Republican-led. Although state laws vary in whether and to what extent they permit sports betting, the states appear to have made common cause in defending their right to set whatever rules they choose.
The more visible partisan valence has come from the White House. President Trump has said that companies like Kalshi and Polymarket “will thrive” under his leadership. His son, Donald Trump Jr., is a paid adviser to Kalshi and an investor in and adviser to Polymarket. Trump Jr. reportedly urged Republican state attorneys general this spring to stop fighting the industry. Whatever the reason—a principled view of the CFTC’s regulatory supremacy or something more cynical involving the president’s family’s business interests—the White House’s thumb on the scale has raised the federalism stakes of these cases even further.
Then there’s the awkward fit between these cases and the justices’ usual instincts. Kalshi’s best arguments run straight into positions that some of the Court’s conservative justices have spent years developing. Justice Thomas has long argued that “purposes and objectives” preemption (under which courts displace state laws that frustrate what Congress was supposedly trying to accomplish) is illegitimate and that “agency musings,” as opposed to laws Congress actually passed, can’t displace state law. Writing for three justices in Virginia Uranium v. Warren, Justice Gorsuch insisted that courts may not use the Supremacy Clause (the provision that makes federal law trump state law) “to elevate abstract and unenacted legislative desires above state law,” a line that Judge Roth’s Third Circuit dissent quoted against Kalshi.
The Third Circuit majority, by contrast, rested its preemption holding in part on the need to avoid the “patchwork” Congress supposedly meant to eliminate. That’s purposes-and-objectives reasoning almost by definition: it turns on what Congress supposedly wanted, not on anything the statute actually says. And much of the CFTC’s position rests on what the agency has declined to do, namely enforce its own rule against gaming contracts—and, as Judge Roth noted, agency inaction alone can’t preempt state law. The Ninth Circuit also relied on Loper Bright to deny the CFTC deference, and it invoked the major questions doctrine, the principle that if Congress wants to give an agency power over a question of vast economic or political significance, it has to say so clearly. As the Supreme Court has put it, Congress doesn’t hide “an elephant in a mousehole”; it doesn’t make sweeping changes through obscure or vague provisions. Reading a Wall Street reform law to turn the CFTC into the nation’s gambling regulator, the Ninth Circuit concluded, would be just that. Then there’s Murphy itself—Justice Alito’s opinion stressing the states’ authority over gambling. In short, a conservative justice inclined to side with the industry, or with this administration, would have to set aside a good deal of his or her own preemption jurisprudence to get there.
The Court’s Democratic appointees have the opposite problem. They have generally defended the presumption against preemption (the default rule that courts shouldn’t read federal law to override state law unless Congress clearly meant to), especially when state consumer protections are at stake. But they’ve also been more willing than their conservative colleagues to find preemption by implication, that is, even when Congress never expressly said it was displacing state law. In Kansas v. Garcia, for instance, Justices Sotomayor and Kagan joined Justice Breyer’s partial dissent, which concluded that federal immigration law impliedly displaced certain state identity-theft prosecutions. Here, though, the agency asking for broad preemptive effect is this administration’s CFTC, acting on behalf of an industry with close ties to the president’s family. So these cases may put many of the justices in a position where their instincts and their prior doctrinal commitments don’t necessarily point in the same direction.
Why the Court Will Take It
Whatever the justices’ views, we’re likely to find out soon. There’s an entrenched circuit split (one that is likely to grow as other courts of appeals decide the appeals pending before them); there’s the aforementioned 39-state amicus brief supporting certiorari; and there’s a bevy of other amici—from the NFL to 145 tribes to the American Gaming Association—urging the justices to resolve these questions sooner rather than later. Leaving the matter to the lower courts isn’t going to resolve anything, and there’s only so much the CFTC can do on its own when the underlying dispute is really about what the statute says about the federal-state relationship.
The only real variable, in my view, is whether that review happens this term or next. In the Third Circuit case, Kalshi (represented by former Acting Solicitor General Neal Katyal) has now received two extensions of time to file its brief in opposition, which is currently due December 7. Thus, the earliest the case could go to the justices’ Conference is January 8—right around the cut-off for granting certiorari and deciding the case this term, at least without expediting the briefing schedule. The Robinhood and OG.com petitions from the Ninth Circuit case may get to Conference sooner, but it seems more likely that the justices will consider all three petitions—and, perhaps, grant them—together. And given how much uncertainty the split is creating for states, tribes, and the industry alike, my own view is that there will be real pressure on the Court—not necessarily to expedite its review, but to do whatever it takes to resolve the questions these cases present this term.
The Stakes
A ruling for Kalshi would, for practical purposes, make the CFTC the nation’s sports-betting regulator. The Ninth Circuit noted that no one suggested the agency had that role until more than a decade after Dodd-Frank passed. As New Jersey points out, it would also mean that state-licensed sportsbooks had “apparently been violating Dodd-Frank all along.” States that allow sports betting would stand to lose licensing fees, tax revenue, and the consumer protections they’ve built around such wagers. And states that don’t allow it could be overrun by Kalshi and the Kalshi clones that would inevitably spring up in the aftermath of such a ruling.
A ruling for the states would leave Kalshi and its rivals answering to 50 different regulators, which is exactly the “patchwork” the CFTC says Congress wanted to avoid. Exchanges would have to geofence state by state, as licensed sportsbooks already do. And the line between a financial contract and a gaming one would remain contested, at least until and unless Congress (remember them?) tries to provide clarity by statute.
At bottom, the Kalshi cases ask whether Congress, without ever quite saying so, handed one of the oldest areas of state police power to a federal agency most Americans have never heard of—through a statutory definition that no one read that way for more than a decade after it was enacted. I’ll confess that my frustration with sports betting probably colors my view of how this dispute ought to be resolved. And the justices’ crosscutting methodological commitments make it hard to predict how it will be resolved. But whatever the outcome, I’m confident of this much: The dispute will be on the Court’s merits docket soon, and it will be one of the most significant statutory federalism cases we’ve seen in some time.
SCOTUS Trivia: Remembering Nasser Hussain
This is the opposite of trivia, but yesterday (November 8) was the eleventh anniversary of the all-too-premature passing of my undergraduate adviser, mentor, and life-changing teacher, Nasser Hussain. I wrote this memorial to Nasser back in 2015, and stand by every single word of it. But two lines, in particular, seem worth repeating here: “It’s no exaggeration to say that the shape of my life would have been profoundly different had it not been for Nasser—and, even though it would have made him terribly uncomfortable to hear me say it, almost certainly not for the better.” And:
I’m sure that, wherever he is, he’s “tsk”-ing me for this very blog post. But among the many things I learned from Nasser was that the politics of memory can be very fickle. And so although he may be gone way, way too soon, consider this my first attempt to preserve his story. I know that I will never forget Nasser Hussain for as long as I can remember anything. And I know that I will do whatever I can to make sure we don’t forget him, either.
I think about—and miss—Nasser a lot, but never more than the second week of November. May his memory continue to be a blessing.
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We’ll have a special audio post tomorrow—a conversation I had with Karen and my Georgetown Law colleague Jonah Perlin about the sudden (and stunning) collapse of Weil Gotshal. And we’ll be back with our regular bonus post on Thursday.
I hope you all have a good week.
My one speaking appearance this week will be Saturday at 9:00 a.m., when I’ll join Professor Max Stearns from the University of Maryland and Nevada Supreme Court Justice Patricia Lee for a panel discussion on important developments in judicial precedent (my focus is on the precedential effects of Supreme Court emergency docket rulings) at the Appellate Judicial Education Institute in Philadelphia.
As a retired bankruptcy attorney, it seems obvious to me that the automatic stay blocks the liquidation and ultimately the collection of claims through arbitration proceedings. But I don’t have a prediction about the outcome because the Court’s understanding of bankruptcy is weak at best. As for Kalshi, it is beyond obvious that this matter, however it comes out, should be resolved by legislation, not adjudication. I don’t want the CFTC or a federal agency under the thumb of a corrupt unitary executive in charge.
Thanks for yet another great post. I understand why Kalshi wants uniformity, but the seeming nexus between federal oversight and a "hiding in plain sight" CFTC will end someday (and, I hope, in about 26 months.) Hard it is not to be amused by the fact that Trump and his followers don't seem to grasp the concept that nothing lasts forever. P.S. I was a regular PredictIt user. I loved the site and never worried about it being used for nefarious purposes. Now? I wouldn't give Kalshi 10 cents.