Prediction Market Odds on the Legal Fight Over Prediction Markets

By Arthur Angelo, PredictionScout Research · Updated Nov 12, 2026, 8:03 AM ET

Key findings

• Supreme Court takes a sports event contract case (December 31): 3%.
• Federal law banning sports prediction markets in 2026 (by Dec 31, 2026): 4%.
• IRS treats sports contract losses under the 90% gambling-loss cap (by Apr 15, 2027): 12%.
• Which exchanges self-certify sports contracts (ForecastEx): 12%.
• Which exchanges self-certify sports contracts (CBOE): 8%.
• Which exchanges self-certify sports contracts (ICE): 8%.
• Which exchanges self-certify sports contracts (Small Exchange): 3%.
• Supreme Court takes a sports event contract case (July 31): resolved No.
• Supreme Court takes a sports event contract case (October 31): resolved No.
• Which exchanges self-certify sports contracts (Aristotle): resolved Yes.
• Kalshi: a law changing the 2025 gambling-loss provision before Jan 1, 2027: 5%.

The markets

Chances are bid/ask midpoints when the spread is 10¢ or less, otherwise the last trade. Polymarket volume is in dollars; Kalshi volume is contracts traded.

How each question settles

Supreme Court takes a sports event contract case

Settles on: Supreme Court docket (New Jersey petition No. 26-299; Kalshi response due Nov. 9, 2026). Rule (excerpt): “This market will resolve to "Yes" if the Supreme Court of the United States grants certiorari in a case explicitly concerning the legality, regulation, or jurisdictional authority over sports event contracts by July 31, 2026, 11:59 PM ET. Otherwise, this market will resolve to "No."A case qualifies if it addresses at least one of the following: (1) whether contracts based on sporting event outco…”

Federal law banning sports prediction markets in 2026

Settles on: Bills signed into law (Congress.gov). Rule (excerpt): “This market will resolve to "Yes" if any bill with the effect of banning CFTC-regulated prediction markets from offering sports betting contracts is signed into law by December 31, 2026, 11:59 PM ET. Otherwise, this market will resolve to "No".Any bill that prohibits federally regulated prediction markets from offering sports betting contracts, or otherwise places such activities under state-lev…”

IRS treats sports contract losses under the 90% gambling-loss cap

Settles on: IRS / Treasury guidance on IRC Sec. 165(d). Rule (excerpt): “This market will resolve to "Yes" if, by April 15, 2027, 11:59 PM ET, the IRS or U.S. Department of the Treasury publishes formal guidance classifying losses from CFTC-regulated sports event contracts as subject to the 90% loss cap under Section 165(d) of the Internal Revenue Code, as amended by the One Big Beautiful Bill Act (Public Law 119-21). Otherwise, this market will resolve to "No".For p…”

Which exchanges self-certify sports contracts

Settles on: CFTC industry filings (self-certifications). Rule (excerpt): “This market will resolve to “Yes” if the listed Designated Contract Market (DCM) self-certifies sports-related event-based contracts with the Commodity Futures Trading Commission (CFTC) between market creation and December 31, 2026, 11:59 PM ET. Otherwise, this market will resolve to “No”.The primary resolution source will be official information released by the CFTC or the respective DCM; howev…”

Where the legal fight stands

States and tribes argue that sports event contracts are gambling under state law; Kalshi and other exchanges argue the Commodity Exchange Act gives the CFTC exclusive jurisdiction over contracts on a designated contract market. Federal appeals courts have reached different results, and New Jersey has asked the Supreme Court to decide the question (No. 26-299). Congress can also settle it by statute, and a separate tax question asks whether losses on these contracts fall under the 90% cap that the 2025 budget law (P.L. 119-21) put on gambling-loss deductions. Exchanges that list new contract types file self-certifications with the CFTC.

What moves these markets

• Supreme Court conference dates and orders lists (a grant or denial of certiorari).
• New appeals-court rulings that widen or close a split.
• Bill introductions, committee votes and must-pass spending bills.
• IRS notices or Treasury guidance on Sec. 165(d).
• New self-certification filings posted by the CFTC.

Worked example

A Yes share on “Supreme Court takes the case by Dec. 31” bought at 29¢ pays $1 if the Court grants certiorari in a qualifying case by that date, a profit of 71¢, and nothing otherwise. With Kalshi’s response to New Jersey due Nov. 9, the petition would usually be distributed for a conference several weeks later, so most of the remaining time window falls in late November and December.

The underlying record

Every case is in the lawsuit tracker; rule changes and bills are in the regulation tracker; exchange filings are on the CFTC filings page.

Download the data

Legal-question markets (one row per market) (CSV)

One row per market; no prices. Free to reuse under CC BY 4.0 with a link back to this page.

Methodology

• Markets. Polymarket Gamma API (public) for four events on legal questions; Kalshi public API for KXGAMBLINGREPEAL.
• Prices. Bid/ask midpoint when the spread is 10¢ or less, otherwise the last trade. Resolved markets are listed in the findings.
• No prices in the CSV. Volume, end date and settlement source only.
• Limits. Prices are snapshots from two exchanges with thin trading on some questions; they are not legal forecasts by PredictionScout. Nothing here is investment advice. Last run: Nov 12, 2026, 8:03 AM ET.

Data sources: prices and volumes come from the public APIs of Kalshi and Polymarket. All trademarks belong to their owners. PredictionScout is independent and not affiliated with any exchange. Nothing here is investment, betting, or legal advice.

Related: Lawsuit tracker · Regulation tracker · CFTC filings · All research