THE RISE OF OPTIONS CONTRACTS IN SPORTS, THE POST-MURPHY REGULATORY CONUNDRUM, AND IMPLICATIONS ON FEDERALISM

Authors

• Scott Barboza

Abstract

The Supreme Court’s decision in Murphy v. N.C.A.A. dismantled the federal prohibition on state-authorized sports betting and returned its primary regulatory authority over to the states. Following Murphy, states adopted widely varying sports-betting regimes. At the same time, advances in financial technology and the growing popularity of prediction markets created a new form of event-based speculation operating outside the traditional sportsbook model. Platforms such as Kalshi began offering “yes-no” contracts tied to sporting outcomes through federally regulated exchanges overseen by the Commodity Futures Trading Commission, framing such products not as wagers, but as financial derivatives governed by the Commodity Exchange Act. These developments have exposed a regulatory fault line left unresolved post-Murphy. State regulators have argued that these contracts are functionally indistinguishable from sports betting and therefore subject to state gambling law. Meanwhile, exchanges such as Kalshi maintain that federal regulation preempts state enforcement efforts. The resulting litigation has forced courts to confront difficult questions concerning preemption, administrative law, and federalism. Some courts have emphasized the functional similarity between prediction markets and sports wagering in preserving state authority, while others have treated federal regulatory designation as sufficient to justify preemption. This Note argues that sports-based event contracts cannot be evaluated through formal classification alone. Rather, they reveal the unresolved tension between federal derivatives regulation and the state-centered sports wagering framework that emerged after Murphy.

Recommended Citation

Barboza, Scott (2026) "THE RISE OF OPTIONS CONTRACTS IN SPORTS, THE POST-MURPHY REGULATORY CONUNDRUM, AND IMPLICATIONS ON FEDERALISM," UNH Sports Law Review: Vol. 5: Iss. 1, Article 6.
Available at: https://scholars.unh.edu/unhslr/vol5/iss1/6

Recommended Citation

Barboza, Scott (2026) "The Rise of Options Contracts in Sports, The Post-Murphy Regulatory Conundrum, And Implications on Federalism," UNH Sports Law Review: Vol.5: Iss.1: Article 3.