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New Jersey has asked the U.S. Supreme Court to decide whether states can regulate sports-related contracts offered on CFTC-registered prediction markets, a dispute that could shape how firms such as Kalshi operate nationwide.
Attorney General Jennifer Davenport filed a petition for certiorari after conflicting federal appellate rulings. According to the filing, the core question is whether the 2010 Dodd-Frank Act pre-empts state gambling oversight when a company lists sports event contracts through a federally regulated exchange.
New Jersey says states still control sports betting rules
In statements tied to the petition, Davenport argued that companies including Kalshi are offering what amounts to sports betting without complying with state gambling law.
"Companies like Kalshi claim to offer legal sports betting in all 50 states, but they refuse to follow the gambling laws of any state," Davenport said. She also said states have long regulated gambling to address issues including compulsive gambling, underage gambling, and insider trading on sports games.
New Jersey’s filing points to the Supreme Court’s 2018 sports betting ruling as support for state authority in this area. The petition also argues that states have made different policy choices on sports wagering and asks the Court to resolve that conflict.
Split appeals court rulings raised the stakes
The petition follows a 2-1 April ruling from the Third Circuit that favored Kalshi and held that New Jersey could not regulate companies offering these products. But the Ninth Circuit later ruled 3-0 for Nevada in a separate dispute against Kalshi, creating a split between federal appeals courts.
That split is a key reason New Jersey is asking the Supreme Court to step in.
Kalshi opposes the move and says federal law already answers the question. Spokeswoman Dani Lever said the company is "an open, nationwide financial exchange" and "cannot be regulated by 50 different regulators." She added that both the Third Circuit and the District of New Jersey sided with Kalshi because "the CFTC’s exclusive jurisdiction pre-empts state law."
What to watch next
The immediate question is whether the Supreme Court will grant certiorari. The outcome could affect not only New Jersey and Nevada, but also other ongoing disputes involving prediction market firms, including litigation involving New York, Baltimore, and a California class-action case tied to DraftKings’ prediction market platform.
For players and industry watchers, the case is a regulatory fight over whether sports-event contracts are treated more like state-regulated betting products or federally supervised financial markets.
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Source: As reported by Sean Chaffin.
