Crypto.com, Robinhood Want SCOTUS to Lean Into Federal Preemption in Prediction Market Case

Crypto.com and Robinhood Markets (NASDAQ: HOOD) are requesting that the U.S. Supreme Court (SCOTUS) rule that the Commodity Exchange Act (CEA) prohibits states from regulating sports event contracts. Crypto.com and Robinhood are petitioning the Supreme Court for a prediction market decision tied to the Commodity Exchange Act (CEA). (Image: Shutterstock) Following recent prediction market rulings by the Third and Ninth Circuit Courts of Appeals, Crypto.com and Robinhood filed petitions with the Supreme Court in hopes of compelling the high court to rule on the CEA potentially prohibiting states from regulating the sports derivatives traded on prediction markets. The companies want that regulatory authority centralized with the Commodity Futures Trading Commission (CFTC) — the federal regulator of prediction markets. In short, Crypto.com and Robinhood are leaning into federal preemption in their SCOTUS petitions. That effort is likely rooted in the notion that the CFTC’s jurisdiction over prediction market operators supersedes any authority the states claim to have. Crypto.com, Robinhood Seeking Legal Clarity Crypto.com and Robinhood, which recently announced a prediction market partnership resulting in the latter taking an equity stake in the former, may be leaning on the CEA as an avenue for gaining the seemingly elusive legal clarity prediction market operators and states crave. Signed into law by President Franklin Roosevelt in June 1936, the CEA is central to the CFTC’s regulatory mission and commodities trading in the U.S. “The Commodity Exchange Act (CEA) regulates the trading of commodity futures in the United States. Passed in 1936, it has been amended several times since then,” according to the CFTC. “The CEA establishes the statutory framework under which the CFTC operates. Under this Act, the CFTC has authority to establish regulations that are published in title 17 of the Code of Federal Regulations.” Prediction market operators believe the CEA is applicable in their quest to continue offering sports event contracts because the law defines “swap” as a contract that is “dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence.” Broadly speaking, some legal experts and states counter that assertion by noting the spirit of the CEA is to not provide an avenue through which states’ regulatory authority over wagering is surpassed at the federal level. Forecasting SCOTUS Moves As of yet, SCOTUS hasn’t responded to the Crypto.com and Robinhood petitions. Depending on the situation, the high court’s response times to petitions can range anywhere from a few weeks to several months. Individual petitions differ from full-fledged cases, but there’s emerging consensus in the investment community that the Supreme Court could hear a prediction market case perhaps as soon as November or at some point prior to the end of the second quarter of 2027. How such a case plays out remains to be seen, but the one certainty is that the high court, if it hears a prediction market case, will deliver the clarity the industry, investors and the states are seeking. The post Crypto.com, Robinhood Want SCOTUS to Lean Into Federal Preemption in Prediction Market Case appeared first on Casino.org.