SCOTUS Review of Prediction Markets Hits 64% on Polymarket — New Jersey Files Cert Petition September 3
The probability of Supreme Court review of prediction market sports contracts jumped from around 30% to 64% on Polymarket's own platform within hours of the Ninth Circuit's August 28 ruling — with $976,000 in trading volume flowing into the contract. New Jersey, the losing party in the Third Circuit's April ruling that went for Kalshi, is filing a certiorari petition on September 3. The Ninth Circuit's 3-0 ruling against Kalshi directly contradicts the Third Circuit's 2-1 ruling for Kalshi, creating the clearest possible circuit split trigger for SCOTUS to grant review.
The probability that the Supreme Court will take a prediction market case by the end of 2026 jumped from roughly 30% to 64% on Polymarket within hours of the Ninth Circuit's August 28 ruling, with more than $976,000 in trading volume flowing into the contract over the weekend. The movement reflects a specific legal mechanics argument: a circuit split between two federal appellate courts on the interpretation of the same federal statute — the Commodity Exchange Act's definition of a 'swap' — is the strongest available trigger for SCOTUS to grant review. The Third Circuit ruled 2-1 in April that Kalshi's sports event contracts ARE swaps subject to CFTC exclusive jurisdiction; the Ninth Circuit ruled 3-0 on August 28 that they likely are NOT swaps and that states can regulate them as gambling. The same statutory question has two opposite answers in two circuits. SCOTUS exists to resolve exactly this kind of conflict.
New Jersey is the losing party from the Third Circuit's April ruling — the court sided with Kalshi and against the state's attempt to enforce gambling laws. NJ is filing a certiorari petition on September 3, asking SCOTUS to review that April decision. The Ninth Circuit's ruling, issued five days before the NJ filing deadline, changes the petitioner's posture significantly: instead of asking SCOTUS to review a lone district-and-circuit ruling in a nascent legal area, New Jersey can now point to an explicit circuit split on the same statutory question. SCOTUS grants review in roughly 1-2% of cert petitions overall; petitions presenting a clear circuit split on a federal statutory interpretation question are far more likely to be granted. The prediction market question — which Congress arguably did not anticipate when it wrote the CEA's swap definition — adds a 'case of national significance' weight that further increases cert probability.
The practical stakes if SCOTUS takes the case are enormous. A ruling that sports event contracts ARE swaps within CFTC exclusive jurisdiction would invalidate all state enforcement actions against CFTC-licensed prediction market operators, effectively giving Kalshi, Polymarket US, Robinhood Rothera, and DraftKings Predictions a national operating license. A ruling that they are NOT swaps would validate state-by-state enforcement and potentially require CFTC-licensed platforms to obtain state gambling licenses in every jurisdiction where they operate sports contracts — a fundamentally different business model. The NFL regular season, beginning September 4, will generate billions in prediction market sports volume during the period in which the Court is deciding whether to accept the case. September NFL volume alone may exceed $4 billion across platforms. The commercial stakes during the cert-consideration window dwarf anything the Court would typically encounter in a financial services regulatory case.
SCOTUS timing, if it grants certiorari on the NJ petition, points toward a decision in the Court's October 2026 term — with oral argument in late 2026 or early 2027 and a ruling by June 2027. During that window, the prediction market sector will operate under legal uncertainty: CFTC emergency orders protecting platforms in New York and Michigan, Ninth Circuit precedent supporting state enforcement in nine western states, a pending Second Circuit consolidation of two Kalshi appeals, and a Sixth Circuit Michigan case. CDC Gaming analysts noted that despite NJ's petition, SCOTUS may not hear the case immediately — the Court sometimes waits for additional circuit development before granting review. But the Ninth Circuit's 3-0 ruling, following five consecutive PI denials against Kalshi, suggests the appellate development needed to justify SCOTUS involvement has arrived.
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Recent updates
CFTC Chair Says Agency Is Watching Prediction Markets for Manipulation Ahead of Midterms
CFTC Chairman Michael Selig said on October 23 that the agency is closely monitoring prediction markets for manipulation ahead of the November 3 midterms, and that it is separately scrutinizing oil market trading tied to President Trump's announcements about the war in Iran. Combined midterm open interest on Kalshi and Polymarket stood at $250 million as of October 18, with Kalshi holding 84%. Selig acknowledged the agency often catches political figures attempting to trade 'oftentimes after the fact.' The remarks highlight the CFTC's dual and somewhat conflicting role as both the platforms' federal protector and their manipulation watchdog, at a time when the agency has shed enforcement staff.
Pentagon Bars Personnel From Trading on Military Information After $400K Prediction Market Scandal
Defense Secretary Pete Hegseth issued an October 20 memo barring Department of Defense personnel from making financial transactions using non-public information, explicitly naming Polymarket and Kalshi. The directive follows the prosecution of a Special Forces soldier accused of making more than $400,000 on Polymarket by betting on a mission to capture Venezuelan President Nicolas Maduro. Hegseth's rationale is a national-security concern: a bet on a military outcome creates a market signal that adversaries can read. 'Our enemies watch movements in these markets,' the memo states.
Crypto.com and Novig Sue Missouri as Market Leaders Hold Back — Eighth Circuit Now in Play via Iowa
Crypto.com and Novig filed federal lawsuits on October 16 challenging Missouri's cease-and-desist orders, arguing their sports event contracts fall under exclusive CFTC jurisdiction. The suits came as Missouri's 30-day compliance window closed. Notably, the market leaders — Kalshi, Polymarket, Robinhood, and Underdog — have not sued; Missouri said it is in 'ongoing discussions' with Kalshi. The outcome is tied to the Eighth Circuit, which is now weighing the same preemption question in Kalshi's appeal of a preliminary injunction denial in Iowa — the fourth federal circuit to take up the prediction market question.