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Jefferies: SCOTUS Could Hear Prediction Markets Case Between November and June

By jili tutorial · September 4, 2026

Jefferies: SCOTUS Could Hear Prediction Markets Case Between November and June

Divergent Circuit Court Rulings Pave the Way for Supreme Court Review

Following conflicting rulings from the Third and Ninth Circuit Courts of Appeals on prediction market cases, momentum is building among investors and legal experts that the U.S. Supreme Court will soon step in. One analyst has offered a concrete timeline for when that could happen.

In a new client note, Jefferies analyst David Katz said the split decisions between the two circuits “suggest a path to SCOTUS between November and April next year.” The U.S. Supreme Court could hear a prediction markets case as early as November and as late as June.

In April, the Third Circuit ruled that all event contracts qualify as swaps, placing them under the jurisdiction of the Commodity Futures Trading Commission (CFTC), which regulates prediction markets. More recently, the Ninth Circuit took the opposite position, declaring that sports event contracts are not swaps subject to CFTC oversight.

Following the Ninth Circuit’s decision, New Jersey—a state within the Third Circuit—is urging the Supreme Court to resolve the conflict. “We’re calling on the Supreme Court to resolve this issue and recognize that Congress did not silently make the sports-betting industry immune from state law,” said New Jersey Attorney General Jennifer Davenport in a statement.

What a Supreme Court Ruling Could Look Like

While the high court is widely expected to take up a prediction market case eventually, speculation abounds on what the outcome might be. Katz noted that the biggest risk to prediction operators is not “outright prohibition” but a range of less drastic consequences the industry wants to avoid.

“We view the most likely outcome to be erosion of economics through taxes, compliance costs, geofencing, product restrictions, and state-by-state fragmentation,” Katz wrote. He added, “North Carolina presents a complex example of the conflict potential with its intended 6% prediction market tax in 2027 vs. a 23% online sports betting tax.”

Legal experts generally believe that prediction market operators are pushing for federal regulation because they want to sidestep the patchwork of state-level rules and tax regimes that traditional sportsbooks must navigate.

Clarity Could Boost Gaming Stocks

Like several of his peers, Katz believes that ending legal ambiguity around prediction markets could benefit selected gaming stocks. “Ultimately, we view any legal clarity as positive for our coverage vs. current uncertainties,” he stated.

Vertical Integration Gains Importance

Separate from the Supreme Court discussion, Katz pointed out that vertical integration is becoming increasingly critical in the prediction market industry due to low fee yields. Companies such as Crypto.com, DraftKings, FanDuel owner Flutter Entertainment, and Robinhood Markets are embracing this model.

“We note that fee yields remain low, with exchange economics generally clustering around a fraction of a percent of traded volume,” Katz concluded. “We estimate DKeX (DKNG) has generated ~$5 million in taker fees on roughly $84 million of volume since inception in mid-June, which suggests heavy dependence on maintaining large-scale liquidity and event-based participation—similar to online sports betting business models.”

The original article appeared on Casino.org.