New Jersey has asked the US Supreme Court to intervene in a growing dispute over who has authority to regulate prediction markets and their sports-related contracts. The petition places the question before the country’s highest court after federal appeals courts issued conflicting decisions on the status of such contracts.
The case centres on Kalshi, whose platform allows users to trade contracts tied to events including sports, elections and corporate announcements. Sports-related contracts have become the dominant part of prediction-market activity, generally accounting for at least 80% of weekly trading volume.
Appeals Courts Reach Different Conclusions
New Jersey’s petition challenges an April decision from the 3rd US Circuit Court of Appeals. That court determined that event contracts qualify as derivatives regulated by the Commodity Futures Trading Commission (CFTC), giving the federal agency authority over them.
The legal position shifted after the 9th US Circuit Court of Appeals ruled in August that sports-related event contracts do not constitute CFTC-regulated swaps. The court rejected requests from Kalshi and Crypto.com for injunctive relief against the Nevada Gaming Control Board.
The opposing rulings have created a circuit split over whether sports contracts offered through prediction markets fall under federal commodities regulation or state gambling laws. New Jersey argues that the disagreement warrants Supreme Court review.
The petition states that the 3rd Circuit decision is “profoundly wrong” and argues that the split “justifies certiorari,” referring to the Supreme Court’s process for deciding whether to review a lower court ruling.
New Jersey Attorney General Jennifer Davenport said: “We’re calling on the Supreme Court to resolve this issue and recognize that Congress did not silently make the sports-betting industry immune from state law.”
The dispute has drawn attention from state officials across the country. Forty-four state attorneys general maintain that sports-related event contracts constitute sports betting and therefore fall under state authority. The CFTC considers the contracts to be “swaps”.
Kalshi Defends Federal Oversight
Kalshi maintains that its business operates as a financial exchange and that federal regulation prevents individual states from applying their own gambling rules to the platform.
“We disagree with New Jersey’s filing. Kalshi is an open, nationwide financial exchange. It cannot be regulated by 50 different regulators. Both the Third Circuit and the District of New Jersey sided with Kalshi because the CFTC’s exclusive jurisdiction preempts state law,” said Dani Lever, the platform’s spokeswoman. “We remain confident in the lower courts’ rulings, and nothing in New Jersey’s filing today changes our view.”
New Jersey’s action represents the latest stage in the wider dispute between the CFTC and state authorities over prediction-market oversight. The conflicting appellate decisions could give the Supreme Court an opportunity to settle the jurisdictional question.
Bank of America said the split could support Supreme Court involvement, although its analysts also indicated that the court might wait until next year because other federal cases remain pending.
“The Third Circuit’s profoundly important decision is also profoundly wrong,” New Jersey’s petition said.
The CFTC did not respond to requests for comment. Following the filing, shares of DraftKings and Flutter Entertainment, the parent company of FanDuel, each rose by more than 5%.
Source:
“New Jersey asks Supreme Court to resolve fight over Kalshi’s future”, npr.org, September 2, 2026
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