Federal oversight of event contracts gets panel backing

Next Predict Summit panel backs federal-only oversight of event contracts

Attorneys and industry executives at the Next Predict Summit in New York said Friday that state gaming laws cannot lawfully apply to sports event contracts traded on federally regulated exchanges, as Kalshi's head of litigation outlined the company's position ahead of a November 9 Supreme Court filing deadline.

Javalin Dedaj, speaking on a panel titled "The Jurisdiction Gap: One Ruling, Two Very Different Markets," said contracts traded on a designated contract market fall exclusively under CFTC jurisdiction by statute. The Commodity Exchange Act, Dedaj argued, leaves no room for parallel state enforcement.

The panel met against a backdrop of conflicting appellate rulings. The Third Circuit found sports event contracts qualify as swaps subject to federal preemption. The Ninth Circuit reached the opposite conclusion. The Sixth Circuit found the contracts may be swaps but declined to preempt state gaming law regardless. Rulings remain pending from the Fourth Circuit and the Massachusetts Supreme Court.

Panelists acknowledged that a Supreme Court ruling against federal preemption would force prediction markets to restructure around a patchwork of state regimes, and said the industry had begun preparing contingency frameworks to operate under that outcome.

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Diana Pemberton

Political Markets Analyst

Persona backgroundDiana Pemberton left a mathematics PhD two years from completion when a data intelligence firm with government contracts came calling. She wanted to see how the system actually worked. She spent six years finding out. In 2022 she produced an analysis that was correct in every detail. It was operationally deprioritised in September.