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Supreme Court petition filed
New Jersey asked the U.S. Supreme Court on Wednesday to resolve whether states can police sports betting on prediction markets operated by Kalshi and competing platforms, seeking to overturn an April appellate ruling that the Commodity Futures Trading Commission has exclusive jurisdiction over Kalshi’s sports-related event contracts.
“New Jersey authorities on Wednesday asked the U.S. Supreme Court to resolve whether states have the power to police sports betting”
New Jersey Attorney General Jennifer Davenport said in a statement that “These companies have no right to offer their sports bets without following state law,” as the petition argues the Dodd-Frank Act did not silently make the sports-betting industry immune from state law.
Reuters reported that Kalshi, valued at $22 billion in a recent funding round, is at the center of an escalating legal battle over whether state gaming regulators can enforce licensing requirements against prediction market firms.
The dispute has been sharpened by conflicting federal appeals decisions, including a 2-1 Third Circuit ruling in April and a separate Ninth Circuit ruling involving Nevada that sided with states, according to Reuters.
NPR framed the question as who should regulate sports betting on Kalshi—“federal commodities regulators” or state gambling authorities—after the Third Circuit found CFTC oversight was exclusive and the Ninth Circuit issued the opposite view.
Kalshi and states clash
Kalshi and other prediction market firms argue they do not offer gambling in the traditional sense, with Kalshi spokesperson Dani Lever telling NPR that “Kalshi is an open, nationwide financial exchange. It cannot be regulated by 50 different regulators.”
In the same dispute, Davenport said New Jersey’s petition is needed because “Congress did not silently make the sports-betting industry immune from state law,” a position echoed by The Hill’s account of Davenport’s Wednesday remarks.
Reuters reported that under Republican President Donald Trump’s administration, the CFTC has shared the companies’ position that trading on prediction markets falls exclusively under the agency’s jurisdiction.
The Hill added that the prediction market fight has produced conflicting appellate rulings, with the Ninth Circuit ruling that Nevada gaming regulators could oversee Kalshi while the Third Circuit had blocked New Jersey from enforcing its gambling laws.
Cointelegraph described New Jersey’s petition as challenging the CFTC’s claim that sports bets on prediction-market platforms amount to “swaps” under the agency’s oversight, and it quoted the petition’s argument that “federal law does not preempt state sports-betting laws in any case.”
What’s at stake next
The stakes, as framed by New Jersey’s filing and repeated in coverage, hinge on whether companies can offer sports event contracts nationwide without complying with state gambling laws, with the petition warning that a Kalshi victory would mean sports bets made outside CFTC-registered markets would “apparently become illegal, even if state law allows them,” according to Cointelegraph.
“Because federal law prohibits trading swaps outside CFTC-registered markets, a Kalshi victory would mean”
Reuters reported that at least four states—Nevada, Massachusetts, Michigan and Washington—have won court orders restricting Kalshi’s activities, underscoring how the regulatory fight is already affecting market access.
NPR said that if the Supreme Court accepts New Jersey’s petition, arguments could be scheduled this fall and the case expected to be decided by next summer.
The Hill described the dispute as the first time the conflicting appellate decisions have been raised to the justices, and it noted that CFTC Chair Michael Selig had vowed in February to challenge state efforts to regulate prediction markets.
In its own framing, Bloomberg Tax said the petition points to a “direct, acknowledged, and irreconcilable split between the Third and Ninth Circuits,” and it quoted New Jersey’s argument that the split will determine whether a “multi-billion-dollar gaming industry can suddenly operate free from state sports-gaming laws.”