New Jersey Attorney General Petitions Supreme Court to Block Kalshi from Offering Sports Betting Outside State Laws

New Jersey Attorney General Jennifer Davenport has filed a petition with the U.S. Supreme Court on the question of whether prediction markets can offer sports wagers without complying with state gambling laws. The filing marks the first certiorari petition to reach the Court on this issue, which has produced litigation in at least 20 states with dozens of suits pending and several state laws currently enjoined.

The petition follows the Third Circuit’s 2-1 ruling in April 2026 that New Jersey’s gambling laws are preempted by federal commodities rules governing Kalshi’s self-certified “swaps.” On Friday, August 28 the Ninth Circuit reached the opposite conclusion, holding that sports bets on sporting event outcomes do not fall under the exclusive jurisdiction of the CFTC. That court stated that “Congress did not take a wrecking ball to all sports gambling regulations built up over decades by federal, state, and tribal governments” when it passed the 2010 Dodd-Frank Act.

“Companies like Kalshi claim to offer legal sports betting in all 50 States, but they refuse to follow the gambling laws of any State. 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,” said Attorney General Davenport. Division of Gaming Enforcement Interim Director Mary Jo Flaherty added that Kalshi’s approach violates New Jersey’s Constitution, which limits gaming to exceptions approved by voters. As reported by G3 Newswire, 95% of Kalshi’s 2025 revenue came from sports betting. States collected $16.89 billion in sports betting revenue nationwide that year, excluding tribal casinos. 44 states, hundreds of tribes, and casinos have opposed the prediction-market theory.

The Circuit Split and Congressional Intent

Courts have overwhelmingly rejected the claim that Dodd-Frank federalized sports wagering. New Jersey co-led an amicus brief joined by 39 other jurisdictions in the Ninth Circuit case; that brief was cited in the opinion finding it implausible Congress meant the CFTC to regulate gambling nationally through broad definitions of “event” and “associated with.” The petition argues Congress did not intend the 2010 Wall Street reform law to preempt state frameworks designed to protect minors, address problem gambling, prevent insider trading, and ensure operator stability.

Where the Risk Lies for Established Markets

A ruling for Kalshi would trigger federal prohibitions on trading swaps off CFTC-registered markets. The result, the petition warns, would render sports wagers at brick-and-mortar sportsbooks and tribal casinos illegal even where state law expressly permits them. This would overturn the states-rights principle the Supreme Court recognized eight years ago in Murphy v. NCAA: if Congress does not regulate sports gambling directly, each state remains free to decide for itself. The petition, led by Solicitor General Jeremy Feigenbaum, asks the Court to restore that balance before the exception swallows the regulated industry.

The Supreme Court’s decision on whether to grant review will determine whether the current state-by-state sports betting regime survives or yields to a single federal commodities overlay that the CFTC itself admits lacks gaming expertise.

Reporting: G3 Newswire

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