New Jersey Asks Supreme Court to Settle Kalshi Fight
The state wants the justices to decide whether federal or state regulators control betting on prediction markets after appeals courts split on the question.
New Jersey asked the Supreme Court on Wednesday to resolve a multibillion-dollar legal battle over who regulates sports betting on prediction market platforms like Kalshi.
At issue is whether the Commodity Futures Trading Commission has exclusive authority over the fast-growing prediction market sector, as Kalshi argues, or whether states retain the power to regulate it as gambling, as New Jersey contends. Prediction markets let users wager on outcomes ranging from corporate earnings calls to elections, but sports bets typically account for 80% or more of weekly trading volume on the platforms.
New Jersey's petition follows conflicting rulings from federal appeals courts. In April, the Third Circuit sided with Kalshi in a case brought against New Jersey, finding the CFTC has exclusive oversight of the industry. Last week, the Ninth Circuit reached the opposite conclusion in a case involving Nevada, ruling that states should regulate the platforms.
Lawyers for the New Jersey Attorney General's Office argued in their filing that the Commodity Exchange Act does not let prediction market operators bypass state law. "States have always maintained the primary police powers for health and safety matters, including for gambling," the attorneys wrote, adding that nothing in the law gives companies "a get-out-of-50-state-laws-free pass by self-certifying their bets on a CFTC-registered market."
Kalshi spokeswoman Dani Lever pushed back, saying the company operates as "an open, nationwide financial exchange" that "cannot be regulated by 50 different regulators." She said Kalshi remains confident in the lower court rulings and that New Jersey's filing does not change the company's view.
State-regulated sportsbooks such as FanDuel and DraftKings, which pay billions of dollars in state taxes, have opposed the prediction market platforms, arguing they are fast-growing rivals that avoid regulatory costs.
The prediction market sector has strong backing from the Trump administration. If the Supreme Court agrees to hear New Jersey's petition, arguments could be scheduled this fall, with a decision expected by next summer.
This article was produced with the assistance of artificial intelligence (AI), in accordance with our editorial policy.
