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Polymarket Offers Market on Supreme Court Hearing Prediction Market Case After Ninth Circuit Ruling

By jili tutorial · September 1, 2026

Polymarket Offers Market on Supreme Court Hearing Prediction Market Case After Ninth Circuit Ruling

Ninth Circuit Ruling Creates Circuit Split

Prediction markets took a legal hit on Friday when a unanimous panel of judges from the Ninth Circuit ruled against Kalshi, a major operator of event-based contracts. This decision creates a conflict with an earlier ruling from the Third Circuit, which sided with Kalshi, setting the stage for a potential Supreme Court review. As with many high-stakes legal developments, users can now wager on whether the Supreme Court will take up the case. On Polymarket’s international platform, traders are predicting when the Court will agree to hear a sports event contract case. The probability of acceptance jumped from 29% to 52% immediately after the Ninth Circuit ruling was announced. The market has already seen nearly $1 million in trading volume, and it currently gives the Supreme Court a 6% chance of accepting the case before October 31.

Judges Rule CEA Does Not Preempt State Gaming Laws

All three judges on the Ninth Circuit panel ruled against Kalshi. The company had appealed to the circuit court after Nevada judges granted an injunction blocking Kalshi from offering its contracts in the state. Kalshi argued that the Commodity Exchange Act (CEA) should allow it to offer a wide range of markets, including sports contracts. However, the judges disagreed, citing a rule that contracts related to gaming can be deemed contrary to the public interest.

Senator Chris Dodd, one of the authors of the Dodd-Frank Act, confirmed that Congress never intended to allow sports markets when it amended the CEA in 2010. The Ninth Circuit panel similarly concluded that the CEA does not override state gambling laws. “The panel concluded that the CEA likely does not preempt Nevada’s gaming regulations as applied to Kalshi’s sports event contracts,” the ruling stated.

Ambiguity Remains as CFTC Moves to Clarify Rules

Despite the unanimous decision, Judge Kenneth Kiyul Lee noted some ambiguity in the CEA’s “Special Rule.” The ruling stated: “The Special Rule provision says that the ‘Commission may determine that [certain contracts or swaps] are contrary to the public interest if’ they ‘involve … gaming.’ The statute thus appears to give the CFTC discretion whether to ban altogether gaming contracts. Put another way, the statute does not seem to categorically bar all gaming contracts, despite the text and contextual clues suggesting otherwise. So perhaps some unique sports events can be part of a swap trade if they meet the statutory requirements.”

Under the current administration, the Commodity Futures Trading Commission (CFTC) has strongly opposed state efforts to ban sports prediction markets, claiming exclusive jurisdiction over licensed operators. The CFTC has also proposed new rules that would more explicitly permit sports contracts. Kalshi and other prediction market operators support these revisions, while states, tribes, and other stakeholders in the sports betting industry oppose them.

All Sides Eager for Supreme Court Resolution

CFTC spokesperson Zach Fulton said the Ninth Circuit misread the statute and regulations, adding that the case “is now teed up a circuit split that calls out for resolution by the Supreme Court.” Kalshi spokesperson Dani Lever said the company will seek further review of the ruling. A Robinhood spokesperson similarly told CasinoBeats that the company “respectfully disagrees” with the decision and intends to appeal.

In May, New Jersey state authorities indicated they would appeal the Third Circuit ruling to the Supreme Court. That circuit had ruled 2–1 that Kalshi was likely to succeed with its argument that the CEA preempts state gambling laws and allows its sports markets. Since then, nearly all subsequent rulings have gone against Kalshi, resulting in site blocks in Michigan, Washington, and Nevada. New Jersey has until September 3 to petition the Supreme Court for a review of the Third Circuit ruling.

“Given the conflict and broader implications for prediction-market regulation, Supreme Court review is now substantially more plausible,” said Carl Kennedy, a former CFTC regulator. However, Kennedy and his colleagues at the law firm Katten highlighted that the rulings in the circuit cases were only preliminary judgments. The Supreme Court may therefore “wait for a more procedurally developed case.”

Like the Third and Ninth Circuit judges, legal experts are divided on how the Supreme Court will eventually rule. Gaming lawyer Daniel Wallach previously estimated a 70–80% chance that judges would rule against prediction markets. He also said the Ninth Circuit ruling could “doom the CFTC’s future rulemaking on sports-event contracts.” In a LinkedIn post reacting to the judgment, Wallach noted several instances where the court “characterized sports-event contracts as ‘sports gambling’,” which he called a bad sign for operators. The Ninth Circuit ruling stated: “The substance of the sports event contracts offered on Kalshi’s DCM is sports gambling, regardless of whether Kalshi calls them swaps.” It added: “The CFTC is not a national gambling regulator. No one suggested it was until over a decade after the law was passed.”

Other lawyers are less certain. Law professor Melinda Roth told CasinoBeats she sees it as more of a 50–50 shot. She noted that the composition of the Court may change before a case is heard, which could still be more than a year away. It took several years for the Court to hear a sports-betting case, so there may be a long wait for a prediction-market case. Roth added that the 2018 PASPA ruling, which authorized states to regulate sports betting, does not necessarily indicate how the Supreme Court will rule on prediction markets.

In 2024, judges ruled in favor of Kalshi, allowing the company to continue offering election markets. At that time, the operator was fighting against the CFTC. Now, with the agency’s full backing, Kalshi is in a stronger position. While Polymarket offers wagering on when the Supreme Court will accept the case, there is no market yet on how the Court will rule. That may come later as the case progresses.