TLDR
- New Jersey filed a Supreme Court petition on Sept. 2 over Kalshi’s sports event contracts
- The state wants justices to resolve a split between the Third and Ninth Circuit Courts
- New Jersey argues Kalshi’s legal theory could put traditional sportsbooks and casinos at risk
- Kalshi says it operates as a nationwide exchange that cannot follow 50 different state rules
- Courts have ruled 34 times in favor of states and 6 times in favor of prediction markets
New Jersey has asked the U.S. Supreme Court to decide whether prediction markets can offer sports event contracts without following state gambling laws.
The state filed its petition on Sept. 2. It wants the Court to answer whether the 2010 Dodd-Frank Act blocks states from regulating sports bets offered through markets registered with the Commodity Futures Trading Commission.
The request follows a split between two federal appeals courts. The Third Circuit ruled in April that Kalshi’s sports contracts count as swaps under federal law. That ruling said federal commodities law overrides New Jersey’s gambling rules.
Last week, the Ninth Circuit reached the opposite result in a separate case involving Nevada. That court said Kalshi’s sports contracts are not swaps, so Nevada’s gambling laws still apply.
New Jersey called the disagreement a “direct, acknowledged, and irreconcilable split.” The state argues the Supreme Court now needs to step in.
New Jersey Attorney General Jennifer Davenport wrote that companies like Kalshi claim to offer legal sports betting nationwide but refuse to follow any state’s gambling laws. She said the state wants the Court to confirm that Congress did not exempt sports betting from state oversight.
What New Jersey Says Is at Stake
New Jersey argues Kalshi’s legal theory could reach far past prediction markets.
The Third Circuit found that Kalshi’s contracts fit the definition of swaps under the Commodity Exchange Act. Dodd-Frank bars companies from offering swaps outside CFTC-regulated markets.
New Jersey says that if Kalshi’s reading of the law is correct, traditional sportsbooks running since the 2018 Murphy v. NCAA ruling have technically been breaking Dodd-Frank too.
Third Circuit Judge Jane Roth raised a similar point in her dissent. She wrote that treating sports bets as swaps pushes the definition to its limit.
New Jersey also says the ruling could disrupt tribal gaming rules under federal law and the Wire Act.
Legal Pressure Keeps Building
The fight has grown since Kalshi began offering sports contracts in January 2025.
Kalshi and the CFTC are now tied up in litigation with 20 states. New Jersey’s petition also points to opposition from 44 states plus tribes, casinos and public officials.
Gaming attorney Daniel Wallach has tracked 39 judicial decisions in prediction market disputes. Thirty three sided with states, and six sided with prediction markets.
A Michigan court issued a preliminary injunction against Kalshi on Sept. 1. That brought the total to 40 rulings, with 34 favoring states.
Kalshi has pushed back on New Jersey’s filing. Company spokesperson Dani Lever said Kalshi operates as a nationwide financial exchange and cannot be regulated by 50 different states.
Kalshi also says the Ninth Circuit did not reject federal oversight outright. Instead, it relied on a regulation the CFTC is currently rewriting.
There is no guarantee the Supreme Court will take the case. The justices must first decide whether to grant review, which can take months.
New Jersey’s earlier sports betting case, Murphy v. NCAA, took about a year and a half from filing to decision. A similar pace here could push a final ruling into 2027 or 2028.
