Securities Regulation Daily Wrap Up, FEDERAL PREEMPTION—U.S.: Robinhood petitions Supreme Court over prediction markets regulation, (Sep 14, 2026)
The question of whether states can regulate prediction markets trading as sports betting is ripening for Supreme Court review.
Robinhood Derivatives said it has submitted a petition for certiorari to the U.S. Supreme Court seeking “collective review” of cases involving prediction markets regulation, which it believes “rightly sits with the CFTC.”
The petition follows a Ninth Circuit ruling on August 28 that affirmed Nevada’s authority to regulate sports-related prediction markets. Robinhood along with Kalshi and Crypto.com unsuccessfully argued that the CFTC has exclusive jurisdiction over the markets.
“The Supreme Court now has the opportunity to provide clarity on the regulation of prediction markets, which we believe rightly sits with the CFTC,” said a Robinhood spokesperson in an emailed statement to Securities Regulation Daily. “It’s our position that the Court should review these cases collectively as we seek to ensure every eligible customer has access to these markets as a tool to aggregate dispersed information, hedge risk, and speculate on their beliefs about future events.”
The spokesperson said the petition was filed on September 10 and is expected to be published on the Supreme Court docket “in the coming days.”
Adverse ruling by Ninth Circuit. While the petition is not yet publicly available, Robinhood’s arguments in KalshiEx v. Assad in the Ninth Circuit may give a preview. The action was originally brought by Kalshi but was consolidated with similar actions by Robinhood and Crypto.com for purposes of appeal.
In oral argument on April 16 before a three-judge panel, Robinhood argued that it faced a “Hobson’s choice” between not doing business and having state law enforced against it for offering event contracts to customers. Robinhood contended that the sports-related event contracts at issue “fall within the exclusive jurisdiction of the CFTC” and that federal law preempts state gaming laws in this area.
The panel ultimately ruled against the exchanges, dissolving a preliminary injunction enjoining Nevada gaming authorities from enforcing state laws against Kalshi’s sports-related event contracts. The court held that Kalshi did not show a likelihood that the Commodity Exchange Act (CEA) preempts state gaming regulations as applied to its sports event contracts.
The panel ruled that the sports-related contracts were not “swaps” subject to exclusive CFTC jurisdiction under the CEA, and that the contracts were prohibited by CFTC regulations that prohibit event contracts related to gaming.
Kalshi filed petitions on September 9 for panel rehearing and rehearing en banc.
Circuit split. The Ninth Circuit decision in favor of Nevada conflicts with a Third Circuit decision for Kalshi in April on similar facts, creating a circuit split likely to hasten Supreme Court review.
The Third Circuit affirmed an injunction against the enforcement of New Jersey’s sports-gambling laws by a 2-1 vote, agreeing with the district court that the Commodity Exchange Act (CEA) preempts New Jersey law from regulating swaps contracts traded on CFTC-licensed exchanges like Kalshi.
New Jersey filed a petition for certiorari on September 2 seeking review of the Third Circuit’s decision.
Sports trading and financial hedging. According to a policy paper provided by Robinhood, the global sports industry brings in an estimated $2.65 trillion in revenue. It says event contracts can provide benefits including hedging and information aggregation. For example, team sponsors could hedge their risk of a team having a losing season, or consumer-focused businesses near a sports stadium could hedge the possibility of cancellation. Further, price discovery enabled by prediction markets could let consumer-focused businesses better predict their labor and material resource needs.
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