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ByRobert Linnehan
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- Crypto.com has joined Robinhood in submitting a writ of certiorari to the U.S. Supreme Court to evaluate sports event contracts
- The prediction market company is petitioning SCOTUS to evaluate the Commodity Exchange Act’s preemption of state laws
- Crypto.com submitted a cert petition with SCOTUS to seek an appeal of the Ninth Circuit’s decision
Crypto.com has taken a similar tact as other prediction market operators to petition the U.S. Supreme Court to evaluate if the Commodity Exchange Act preempts state regulation of sports event contracts.
Theprediction market company joined Robinhood in submitting a writ of certiorari to the U.S. Supreme Court (SCOTUS), asking the court to evaluate whether or not states can regulate sports event contracts through their own gambling laws.
This comes after the U.S. Court of Appeals for the Ninth Circuit’s recent ruling affirmed District Judge Andrew Gordon’s April 2025 decision to dissolve an approved Kalshi injunction and allow the Nevada Gaming Control Board to uphold its state gambling laws against sports event contracts.
Appealing Ninth Circuit Decision
Crypto.com submitted the writ of certiorari to SCOTUS last week. The prediction market company submitted the following question:
The question presented is whether the CEA preempts state regulation of sports-event contracts traded on a DCM.
While the writ of certiorari requests SCOTUS review the Ninth Circuit’s decision, the nation’s highest court does not have to accept the writ and hear the case.
The Ninth Circuit’s decision combined both Robinhood and Crypto.com’s sports event contract cases into its Kalshi ruling. This decision allowed both Crypto.com and Robinhood to appeal the court’s ruling, which both have done by submitting writs of certiorari to SCOTUS.
A split exists at the circuit court level, as the Ninth Circuit recently ruled in favor of Nevada. The three-judge panel voted 3-0 to affirm Judge Gordon’s decision, noting that it disagreed with Kalshi’s overly broad reading of the Commodity Exchange Act (CEA) and ruled that its sports event contracts are likely sports bets.
“Because we disagree with Kalshi’s overly broad reading of the CEA, and because CFTC regulations currently prohibit offering contracts related to gaming on prediction markets, we affirm the district court’s order dissolving the injunction as to sports event contracts. We remand for the district court to consider Kalshi’s election contracts,” Judge Ryan D. Nelson wrote in his decision.
However, the Ninth Circuit’s ruling differed sharply from a U.S. Third Circuit Court of Appeals ruling this past April, in which the court ruled New Jersey could not regulate Kalshi’s sports event contract offerings, as they reached the CEA’s definition of a swap.
In its writ, Crypto.com counsel notes the “Ninth Circuit’s decision is wrong,” as sports event contracts “fit the bill” of a swap as they are contracts providing payment “depend on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence.”
“Under the terms’ plain meaning, what happens in a sports game, season, or even individual play is ‘an event or contingency.’ And if a game is so prominent that predictions as to its outcome are being traded on a DCM, then the outcome is ‘associated with potential financial, economic, or commercial consequence’ from, say, the likely rise in business in the winning team’s hometown,” Crypto.com wrote.
Sports Event Contract Legal Fight Heating Up
While Robinhood also submitted a writ to SCOTUS, Kalshi is taking a different tact, as it recently requested an en banc hearing with the Ninth Circuit to appeal its decision.
Kalshi asserts the court’s decision creates a circuit split “on an exceptionally important question of federal preemption based on internally inconsistent reasoning that conflicts with the plain text of the CEA.”
“Kalshi is requesting the Ninth Circuit to consider the appeal en banc. This is necessary because the CFTC rule that the three-judge panel largely based its decision on has been repealed and is being replaced. Once that happens, material parts of the panel’s decision will be moot. In light of the incoming new rule, we look forward to continuing the proceedings in the Ninth,” a Kalshi spokesperson told Sports Betting Dime.
If approved, an en banc hearing will include all of the judges in the U.S. Court of Appeals for the Ninth Circuit, instead of just three. Kalshi asserts the Ninth Circuit’s initial decision “rejected well-reasoned decisions in favor of its erroneous interpretation of the CEA and the CFTC’s soon-to-be-replaced regulation.”
“It is no mystery where the panel went wrong. The decision repeatedly asserts that sports-event contracts are no different than sports bets, and that Congress could not have intended for the CEA to preempt the states’ power over sports betting—regardless of what the plain text may say. But that ignores the fundamental difference between state-regulated sports gambling—where the house (or bookie) sets the odds and wins when the bettor loses—and trades involving sports-events contracts on a DCM—where the market sets the value of the trades and the federally regulated DCM neither sets the odds nor wins when traders lose. The former, including their modern incarnations, remain fully subject to state regulation. But Congress placed the latter squarely within the exclusive regulatory oversight of the CFTC,” Kalshi counsel wrote in its motion.
Daniel Wallach, a gaming law attorney, Founder of Wallach Legal and UNHLaw Sports Wagering, noted on X that en banc hearings are rarely granted. In FY 2025, only 1.5% of en banc requests in the Ninth Circuit were granted.
Robert Linnehan covers all regulatory developments in online gambling and sports betting. He specializes in U.S. sports betting news along with casino regulation news as one of the most trusted
Source: www.sportsbettingdime.com