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Prediction Markets & Crypto Regulation News
New Jersey has taken its legal fight against prediction markets to the highest court in the United States.
Attorney General Jennifer Davenport and gaming enforcement interim director Mary Jo Flaherty fileda 332-page petition for a writ of certiorari with the US Supreme Court on Sept. 2, asking the justices to decide whether states or federal regulators have authority over sports betting contracts offered on prediction market platforms.
The petition centers on New Jersey’s ongoing dispute with Kalshi, a prediction market platform that offers contracts tied to sporting events. The conflict began when New Jersey sent Kalshi a cease-and-desist letter alleging the company was violating state gambling laws. Kalshi responded by suing New Jersey, and the case worked its way up to the US Court of Appeals for the Third Circuit, which ruled 2-1 in Kalshi’s favor in April 2026. That ruling found that the Commodity Exchange Act, administered by theCommodity Futures Trading Commission (CFTC), preempted New Jersey’s state gambling laws.
The Core Legal Question Before the Court
New Jersey’s petition asks the Supreme Court to decide whether the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act preempted states from regulating sports bets placed within their jurisdictions when those bets are offered on markets registered with the CFTC. The petition also challenges the CFTC’s position that sports bets on prediction market platforms qualify as “swaps” under the agency’s jurisdiction. New Jersey argued that federal law does not preempt state sports gambling laws regardless of how the contracts are classified.
Davenport saidstates have spent years building careful gambling frameworks designed to prevent compulsive gambling, underage betting, and insider trading on sports games. “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. “These companies have no right to offer their sports bets without following state law, which is why dozens of states across the ideological spectrum have opposed them.” Officials cited civil enforcement cases brought by gaming authorities in at least 20 states.
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Kalshi Pushes Back, Circuit Split Complicates Picture
Kalshi has pushed back against New Jersey’s decision to escalate the case. Spokesperson Dani Lever said the platform disagrees with the filing and cannot operate under 50 different state regulatory regimes. “We remain confident in the lower courts’ rulings, and nothing in New Jersey’s filing today changes our view,” Lever said. The company describes itself as an open, nationwide financial exchange subject to federal oversight.
The legal landscape has grown more complicated in recent weeks. Just days before New Jersey’s Supreme Court petition, the Ninth Circuit Court of Appeals, which covers Nevada and other western states, ruled that the Commodity Exchange Act likely does not preempt Nevada’s authority to regulate sports contracts on prediction markets. That ruling contradicts the Third Circuit’s April decision in Kalshi’s favor, creating a circuit split that legal experts say strengthens the case for Supreme Court intervention. After the Ninth Circuit ruling, a CFTC spokesman told a media outlet that the decision called out for resolution by the Supreme Court.
The petition does not guarantee the justices will take up the case. Dozens of other state and federal court cases are examining the same jurisdictional question, and the court may choose to wait for more of those cases to resolve before wading in. Under CFTC Chair Michael Selig, the agency has gone as far as suing several states and proposed a formal framework for regulating prediction markets, while continuing to assert exclusive jurisdiction over the sector.
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Source: coinmarketcap.com