How US States Are Fighting Sports Event Contracts

US states are mounting a coordinated legal and legislative pushback against sports event contracts on prediction market platforms. They argue these products amount to unregulated sports betting that bypasses state gambling rules.

The fight centers on whether federal Commodity Futures Trading Commission (CFTC) oversight of event contracts preempts state authority. As of October 2026, this has produced a patchwork where sports contracts are live in most states but blocked or contested in more than 20 jurisdictions.

Background on the Legal Conflict

Sports event contracts let users take yes/no positions on real-world outcomes such as NFL game results or player performance. Major platforms including Kalshi and Polymarket operate under CFTC regulation as designated contract markets. Yet many states contend these contracts closely resemble traditional sports wagers and should require state gaming licenses.

The dispute intensified in 2026 with conflicting federal appeals court decisions. The Third Circuit ruled in favor of federal preemption in New Jersey's case against Kalshi, while the Ninth Circuit sided with Nevada, allowing state enforcement. This split prompted New Jersey to petition the U.S. Supreme Court, supported by the NFL and a bipartisan coalition of 40 states plus the District of Columbia. Newsweek reported the broad state backing for the petition.

For users interested in skill-focused forecasting rather than pure chance, platforms like Zanlo provide built-in analytics, historical stats, live data and AI-powered insights across 18 categories including sports. This approach lets participants enter positions, exit early and track performance to refine predictions.

The volume of trading underscores the stakes. Prediction markets handled tens of billions in notional value in recent years, with sports contracts forming a large share. States see revenue and consumer protection implications, while platforms emphasize innovation and federal oversight.

How States Are Challenging the Markets

States employ multiple strategies: direct lawsuits, cease-and-desist orders, new legislation and court injunctions. Nevada secured a preliminary injunction blocking Kalshi's sports contracts, and Michigan followed with similar restrictions. Washington issued broad injunctions covering sports and other event types.

Legislatures have acted too. Minnesota passed a law attempting to criminalize prediction market activities, though a federal judge blocked it pending preemption review. North Carolina took a different tack by recognizing federal authority while imposing a 6% tax on trading fees. Other states like Illinois and Kentucky introduced transaction taxes or restrictions on specific contract types.

Litigation remains active in more than a dozen states including Arizona, Connecticut, Maryland, New York, Ohio and Tennessee. The CFTC has filed suits against several states to defend exclusive federal jurisdiction. Court outcomes vary: some judges grant platforms preliminary relief, while others allow states to enforce gambling laws.

This multi-pronged approach creates uncertainty for platforms and users. Platforms often geofence restricted states or limit sports contracts there, while non-sports markets like economic indicators continue in more jurisdictions.

Key Court Rulings and the Circuit Split

The legal landscape features a clear divide among federal circuits. In April 2026, the Third Circuit upheld an injunction preventing New Jersey from applying its gambling laws to Kalshi, finding the contracts likely qualify as swaps under the Commodity Exchange Act. The Ninth Circuit reached the opposite conclusion in August 2026 regarding Nevada, ruling the sports contracts do not meet the swap definition and clearing the way for state regulation.

Additional rulings have reinforced the patchwork. Michigan state courts issued temporary restraining orders with daily fines for non-compliance. Utah courts granted summary judgment favoring state authority. In contrast, some district courts in other circuits have leaned toward platforms.

The Supreme Court petition filed by New Jersey seeks to resolve whether the Commodity Exchange Act preempts state gambling regulation for these products. A bipartisan group of 39 states and D.C. filed an amicus brief supporting the petition, arguing courts are "hopelessly confused." The NFL joined the effort, highlighting concerns over unregulated sports wagering.

These developments affect availability. As of early October 2026, major platforms operate sports contracts without restriction in roughly 30 states, face limitations in others and are fully blocked in a handful. Users must check platform-specific status, as availability can shift with new rulings.

Comparison of Regulatory Approaches

States fall into several tiers based on their actions:

• Fully restricted by court order: Nevada, Michigan, Washington – sports contracts blocked on leading platforms.
• Active litigation or enforcement: Over 15 states including Arizona, Connecticut, Illinois, Maryland, New York, Ohio and Tennessee with ongoing suits or cease-and-desist actions.
• Legislative responses: Minnesota attempted a ban; North Carolina enacted a tax; others consider fees or limits on specific markets.
• No major action: Roughly half the states have taken no documented steps against prediction markets, allowing full access under federal rules.

This contrasts with traditional sports betting, legalized in 39 states plus D.C. by late 2025, where states control licensing and taxation directly.

Practical Implications for Users

The ongoing battles mean availability can change quickly. Platforms advise checking local rules before trading sports contracts. Non-sports markets often remain accessible even where sports ones are restricted.

Users seeking data-driven engagement can explore platforms prioritizing analytics and skill. Zanlo's combination of historical stats, AI support and exit flexibility appeals to those viewing prediction as an informational exercise rather than pure chance.

As the Supreme Court considers whether to hear the case, the industry awaits clarity that could standardize rules nationwide or preserve the current state-by-state variation.

The regulatory environment continues evolving with new filings and hearings scheduled into late 2026. Staying informed through official court documents and platform updates remains essential for anyone participating in event contracts.