TLDR
- Polymarket raised the odds of Supreme Court review of the Kalshi case from 29% to 52% after a Ninth Circuit ruling.
- The Ninth Circuit ruled against Kalshi, siding with Nevada’s authority to block its sports contracts.
- This ruling conflicts with an earlier Third Circuit decision that favored Kalshi, creating a legal split.
- Kalshi plans to seek further review, and New Jersey has until September 3 to ask the Supreme Court to weigh in on the Third Circuit case.
- Legal experts are divided, with odds of an eventual ruling against prediction markets estimated between 50% and 80%.
A legal battle over sports prediction markets has taken a new turn. The next question isn’t who wins, but whether the Supreme Court will even hear the case.
Polymarket’s international platform raised its odds on Supreme Court review after the Ninth Circuit ruled against Kalshi on Friday. The probability jumped from 29% to 52%, with almost $1 million traded on the market.
The same market puts the odds of the court accepting the case before October 31 at only 6%. That gap shows how uncertain the timeline still is.
Ninth Circuit Sides Against Kalshi
The case started in Nevada, where state regulators tried to block Kalshi’s sports contracts. A federal judge issued an injunction stopping the company from running those markets in the state.
Kalshi appealed, but the Ninth Circuit panel ruled unanimously against the company. Kalshi had argued that the Commodity Exchange Act gives the Commodity Futures Trading Commission sole authority over its contracts, blocking states from applying gambling laws.
The court disagreed. It found that federal law likely does not stop Nevada from enforcing its own gaming rules on Kalshi’s sports contracts.
This decision puts the Ninth Circuit at odds with the Third Circuit. Judges there ruled 2-1 in an earlier case that federal law should take priority over state gambling restrictions.
The split matters beyond one company. The CFTC has argued that prediction markets fall under federal oversight, while states and tribal groups have pushed back.
Judge Kenneth Kiyul Lee noted that the Commodity Exchange Act leaves room for debate. His opinion suggests the law may give the CFTC some discretion over gaming contracts rather than a full ban.
Supreme Court Path Remains Unclear
Two conflicting appeals court rulings don’t guarantee the Supreme Court will step in. New Jersey has until September 3 to formally ask the court to review the Third Circuit case.
Kalshi has said it will pursue further review of the Ninth Circuit decision as well. Both cases so far involve early rulings, not final judgments, which could give the Supreme Court reason to wait.
Legal opinion is split. Attorney Daniel Wallach has put the odds of an eventual ruling against prediction markets at 70% to 80%.
Law professor Melinda Roth sees it differently. She has described the outcome as close to a coin flip and noted the court’s makeup could shift before any hearing happens.
Timing adds another layer of uncertainty. Even if the justices agree to hear the case, a hearing could be more than a year away.
The Supreme Court’s 2018 ruling that ended the federal sports betting ban gave states wide authority over sports wagering. That ruling doesn’t settle whether federally regulated prediction contracts count as financial instruments or gambling products.
Kalshi is currently facing court losses and state bans in Michigan, Washington and Nevada. Polymarket’s new market adds another variable, letting traders bet on the court’s next move before the justices decide anything.
There is no comparable market yet on who would win if the case is heard.
