New Jersey Petitions Supreme Court to Resolve Split Over Prediction Market Jurisdiction

New Jersey has asked the U.S. Supreme Court to settle whether sports event contracts offered by prediction markets constitute federally regulated swaps under commodities law or wagers governed by state gambling regulations. The petition filed this week seeks to overturn a 2-1 Third Circuit ruling from April that granted the CFTC exclusive jurisdiction over such contracts offered by Kalshi. It follows a unanimous Ninth Circuit decision last week holding that Kalshi‘s contracts are not swaps under the Commodity Exchange Act and remain subject to state oversight.

The filing underscores an irreconcilable appellate split with broad stakes for states, tribes, and the multi-billion-dollar sports gaming sector. New Jersey Attorney General Jennifer Davenport noted in a 47-page brief that the dispute threatens the longstanding tradition of state gaming regulation and carries implications for the Indian Gaming Regulatory Act and the Wire Act. Davenport added that the current patchwork creates an explosion of litigation as companies operate nationwide without complying with state statutes.

Conflicting Rulings and Pending Cases

The Third Circuit sided with Kalshi, finding federal preemption of New Jersey‘s gaming laws. The Ninth Circuit reached the opposite conclusion in the Nevada matter, determining the products are sports wagers. Davenport stated that dozens of states across the ideological spectrum have opposed these companies. Sports betting generated $16.89 billion in state revenue in 2025 according to the American Gaming Association, excluding tribal casinos.

Additional appeals remain pending. The Fourth Circuit is considering Maryland’s effort to enforce its laws against Kalshi. Consolidated challenges from Ohio and Tennessee were argued in July. As reported by CDC Gaming, gaming analyst Steven Ruddock estimated only a 10 percent chance the Supreme Court declines to take the case despite its typical grant rate of roughly 1 percent of certiorari petitions.

Reactions From Regulators and Kalshi

Mike Dreitzer, chairman of the Nevada Gaming Control Board, said the state’s position rests on decades of legal precedent. “The simple fact is, anytime you risk money on the uncertain outcome of a sporting event, that’s a bet. End of story,” Dreitzer stated. He added that Nevada supports innovation in prediction products but requires all offerings to come through licensed channels.

Kalshi spokeswoman Dani Lever responded that the company operates as an open nationwide financial exchange under CFTC oversight. “It cannot be regulated by 50 different regulators,” Lever said. Lever noted that both the Third Circuit and District of New Jersey sided with Kalshi and expressed confidence that the Supreme Court petition will not alter the company’s view.

The Supreme Court now has the opportunity to resolve who holds regulatory authority over this sector. A grant of certiorari would clarify compliance obligations for operators and protect the balance between federal commodities rules and state police powers.

Reporting: CDC Gaming

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