So the Prop 8 arguments happened. Early thoughts.
There are quite a few possible outcomes possible from this case. After oral arguments some of them seem much less likely. Note I'm going on very limited information as I haven't had time to read or listen to the full arguments yet.
1) Prop 8 upheld.
This seems extremely unlikely now. You definitely have two to four of the conservative justices taking this position, but it looks unlikely that they could get 5 votes. Kennedy all but ruled it out. I'd be shocked if this happened.
2) The court finds finds that those defending Prop 8 don't have standing and the case is thrown out.
This would have similar effects to 3 except removing adding a reset button to the legal process. Prop 8 would remain gone, but it would be possible for someone who did have standing to bring a new case in the future. The suggested example would be a state employee refusing to recognise same-sex marriage in their work. This seemed to be Robert's strategy, but looks near impossible now as both Kennedy and Alito argued strongly that the defendants did have standing otherwise unpopular ballot initiatives could never be defended in court. About as likely as an upholding now.
3) The court explicitly upholds the Californian ruling.
The ruling out of the District Court was a strange one. They essentially ruled that Prop 8 was illegal because it removed a right that had previously been granted. It didn't say that there is an inherent right to gay marriage in the constitution, just that once such a right has been extended to a group it can't be removed again. At least in part it looked like a strategic option to allow the Supreme Court to strike down Prop 8 without expanding gay marriage to all states. In my opinion the legal side was a stretch (is stripping a right briefly granted really that different from denying it outright?) and it almost looked too strategic and targeted towards Kennedy, who openly attacked it during arguments. I very much doubt this will happen. Even if it did, it wouldn't have much legal effect elsewhere, beyond making it impossible for states to remove gay marriage once granted.
4) The court dismisses the case entirely.
This seems entirely possible now given Kennedy's words. The effect would be pretty much identical to 3, except that the Californian ruling would have no legitimacy outside California, meaning that other states that tried to repeal a gay marriage law wouldn't be blocked by that ruling. Not that that is ever likely to matter. Right now this is where the smart money is going.
5) The court strike down gay marriage based on the administration's logic.
Essentially the administration argued that having 'separate but equal' civil unions is unlawful, and any state that discriminates in that way must allow gay marriage. Essentially all civil union states become gay marriage states, but those states without such unions can keep gay marriage illegal. The lack of any recognition of gay couples would become a matter for future cases. I don't think anyone was buying this, ever.
6) Prop 8 struck down because gay marriage is found to be a right.
This means gay marriage becomes legal in all states. Always seemed a little unlikely to me. The liberal justices definitely indicated they support this, with all four making comments in this direction. Kennedy made some statements that have been taken as opposition to this, but the quoted ones are not definitive and who knows what will happen. I still think it's a long shot.
As far as outcomes go, 1 would be the bad end. 2 is the good end but with a hint the end boss isn't truly dead. 3 and 4 are the good end. 5 is the surreal good ending you have to work hard for, is a lot of fun to watch but leaves half the people who get it incredibly confused. 6 is the rainbows and unicorns, we're all Californians now party time ending. Again, right now the smart money is on 4, but things aren't set in stone until the ruling is handed down.