New Jersey Petitions Supreme Court on Prediction-Market Sports Bets

New Jersey Attorney General Jennifer Davenport filed a petition on 2 de setembro de 2026, asking the U.S. Supreme Court to decide whether prediction markets can offer sports wagers without following state sports-gambling laws. The Office of the Attorney General said it is the first certiorari petition filed with the Court over the legality of a business model in which Kalshi self-certifies sports wagers with the Commodity Futures Trading Commission and offers them without complying with state laws.

According to the office, litigation over the question has erupted across at least 20 states, with dozens of active suits pending and the gambling laws of several states currently enjoined by federal courts.

“Companies like Kalshi claim to offer legal sports betting in all 50 States, but they refuse to follow the gambling laws of any State,” 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.”

Division of Gaming Enforcement Interim Director Mary Jo Flaherty said Kalshi promotes itself as offering legal sports betting in all 50 states, including wagering on NCAA games held in New Jersey and involving New Jersey teams, which she described as impermissible under the state constitution. New Jersey’s constitution bars gambling except for exceptions approved by voters.

From Cease-and-Desist to a Divided Third Circuit

Kalshi operates a market where users buy and sell “event contracts” that pay out based on whether a future event occurs, and it began offering sports bets on its exchange in janeiro de 2025, according to the state’s petition for a writ of certiorari. The Division of Gaming Enforcement sent Kalshi a cease-and-desist letter in 2025, warning that the bets violated New Jersey’s Sports Wagering Act, which permits only licensed entities to offer sports wagering in the state, and that Kalshi was accepting bets from New Jersey residents on collegiate sporting events in violation of the state constitution.

Kalshi sued on 29 de março de 2025, arguing that the Commodity Exchange Act, as amended by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, preempts state sports-wagering laws because its bets are swaps subject to the CFTC’s exclusive jurisdiction. A federal district court granted Kalshi a preliminary injunction on 28 de abril de 2025. A divided Third Circuit panel affirmed on 6 de abril de 2026, ruling 2-1 that New Jersey’s sports-wagering laws are preempted as applied to the sports bets. Judge Roth dissented, reasoning that New Jersey’s sports-wagering laws are not preempted by the Act.

The petition asks the Court to resolve a single question: whether the 2010 Dodd-Frank Act preempted states from regulating sports bets within their jurisdictions when those bets are offered on markets registered with the CFTC.

A Split With the Ninth Circuit

On 28 de agosto de 2026, the Ninth Circuit explicitly disagreed with the Third Circuit, holding that bets on the outcomes of sporting events do not fall within the CFTC’s exclusive jurisdiction. “Congress did not take a wrecking ball to all sports gambling regulations built up over decades by federal, state, and tribal governments,” the Ninth Circuit wrote of the 2010 Wall Street reform bill.

New Jersey co-led an amicus brief in that case joined by 39 other jurisdictions, and the Ninth Circuit cited the brief in concluding that it is implausible that Congress intended to allow the CFTC to engage in the national regulation of gambling based on expansive definitions in a Wall Street reform bill.

The petition describes a broader divide in the lower courts: at least 39 lawsuits across 20 states, and more than 20 decisions that the petition says have divided 18-4, with the vast majority rejecting the Third Circuit’s approach. In an 24 de abril de 2026, order, the Sixth Circuit said it was unconvinced on the preliminary briefing that preemption applies. The petition also notes that 44 states, hundreds of Tribes, and casinos have opposed the prediction markets’ litigation position, and that the CFTC has stated it is not a gaming regulator and lacks specialized expertise to oversee gaming.

Economic and Legal Consequences

The petition and the attorney general’s office point to the size of the industry at issue. Sports betting generated $16.89 billion in revenue for states nationwide in 2025, excluding sportsbooks in tribal casinos, according to American Gaming Association figures cited in the petition. The petition, citing the Ninth Circuit’s opinion, states that 95% of Kalshi’s 2025 revenue came from sports betting.

New Jersey also argues that a ruling in Kalshi’s favor would reach beyond prediction markets. Because federal law prohibits trading swaps off CFTC-registered markets, the attorney general’s office said, a Kalshi victory would seemingly make sports wagers at traditional sportsbooks, including brick-and-mortar casinos in Atlantic City, Las Vegas, and on tribal lands, illegal even where state law allows them.

The petition grounds the state’s case in its own regulatory history. New Jersey voters approved gambling in Atlantic City in 1976 and sports wagering in 2011, and after the Supreme Court’s 2018 decision in Murphy v. NCAA invalidated the federal law that had prevented most states from authorizing sports betting, New Jersey enacted its Sports Wagering Act. That law requires bettors to be at least 21, bars athletes, coaches, referees, directors, and owners from placing sports bets, prohibits wagers on college sporting events in New Jersey or involving New Jersey college teams, and dedicates a portion of the state fee to prevention, education, and treatment programs for compulsive gambling.

Justice Samuel Alito twice extended the state’s deadline to petition, most recently to 3 de setembro de 2026. The petition was filed by Solicitor General Jeremy Feigenbaum, Deputy Solicitor General Stephen Ehrlich, and Special Assistant Liza Fleming, with support from Deputy Attorneys General Emily Bisnauth, Patrick Jhoo, and Vivek Mehta. It asks the Court to grant review and reverse the Third Circuit.