New Jersey Takes Kalshi Sports-Betting Fight to Supreme Court
United States.- 8 September 2026 | www.zonadeazar.com New Jersey Attorney General Jennifer Davenport has petitioned the US Supreme Court to determine whether prediction-market platforms can offer contracts tied to sporting outcomes without complying with state sports-betting laws.
The filing directly challenges Kalshi’s business model, under which the company argues its sports contracts are swaps subject to the exclusive jurisdiction of the Commodity Futures Trading Commission.
First Supreme Court Petition
This is the first petition for certiorari submitted to the Supreme Court specifically concerning the legality of this prediction-market business model.
Litigation has already emerged across at least 20 states, with numerous cases still active.
At the centre of the dispute is whether state gambling laws can apply to sports contracts offered through CFTC-registered markets.
New Jersey Seeks to Stop Kalshi Sports Betting
New Jersey argues that Kalshi is effectively offering sports betting without complying with the state’s regulatory framework.
The state says the company should not be able to bypass requirements covering:
- Licensing.
- Minor protection.
- Responsible gambling.
- Sports integrity.
- Prevention of insider betting.
- Financial stability.
- Regulatory oversight.
The dispute also raises constitutional questions concerning the authority of individual states to determine how gambling is conducted within their borders.
College Sports Contracts
New Jersey officials have also challenged contracts offered on NCAA events held in the state or involving New Jersey teams.
The state Constitution places specific restrictions on certain forms of college sports betting.
New Jersey argues that Kalshi’s federal classification would allow the company to circumvent those restrictions.
Kalshi’s Position
Kalshi maintains that its sports contracts qualify as swaps regulated under federal commodities law.
Under its interpretation, the CFTC has exclusive authority over these products because Kalshi operates as a federally registered market.
The company sued New Jersey in 2025, arguing that state gambling laws could not be applied to its contracts.
Third Circuit Ruled for Kalshi
In April 2026, the Third Circuit Court of Appeals ruled in Kalshi’s favour by a 2-1 majority.
The court held that New Jersey gambling laws were pre-empted by the applicable federal framework.
The judgment represented a significant victory for Kalshi’s legal strategy.
Ninth Circuit Reaches Opposite Conclusion
The legal landscape shifted on 28 August 2026.
The Ninth Circuit Court of Appeals rejected the interpretation that sports contracts fall solely within the CFTC’s jurisdiction.
The court found that Congress had not dismantled decades of state, federal and tribal gambling regulation through financial reform legislation adopted in 2010.
Circuit Split
The disagreement between the Third and Ninth Circuits is one of the principal reasons being cited for Supreme Court review.
Two federal appellate courts have reached opposite conclusions on the same legal question.
The split creates uncertainty for:
- States.
- Prediction markets.
- Sportsbooks.
- Tribal gaming interests.
- Regulators.
- Investors.
Dodd-Frank at Centre of Dispute
The case revolves around interpretation of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.
Kalshi argues that the legislation brought the contracts it offers under exclusive federal oversight.
New Jersey argues Congress never intended to transfer control over a multi-billion-dollar sports-betting sector to the CFTC.
CFTC Is Not a Gambling Regulator
New Jersey also disputes the idea that the CFTC should become the sole authority overseeing these products.
The federal agency has acknowledged that it is not a specialist gambling regulator.
States say this raises concerns around player protection, sports integrity and compliance with safeguards specifically designed for betting markets.
44 States Oppose Kalshi Theory
The dispute extends far beyond New Jersey.
According to the filing, 44 states, hundreds of Tribal interests and casino businesses have already opposed the legal arguments advanced by Kalshi and other prediction-market operators.
The level of involvement demonstrates the nationwide significance of the issue.
Economic Importance of Sports Betting
New Jersey has also highlighted the economic scale of the market.
Sports betting generated USD16.89 billion in revenue for US states during 2025, excluding sportsbooks operating at Tribal casinos.
Approximately 95% of Kalshi’s 2025 revenue also came from sports markets.
Risk for Traditional Sportsbooks
The petition identifies another potentially disruptive legal consequence.
If sports contracts are classified as swaps exclusively governed by federal commodities law, federal legislation prohibits those swaps from being traded outside CFTC-registered markets.
New Jersey argues that this logic could potentially render even conventional state-authorised sportsbook wagers unlawful.
Casinos and Tribes Could Be Affected
Under New Jersey’s interpretation, Kalshi’s legal theory could affect:
- Atlantic City casinos.
- Las Vegas sportsbooks.
- Tribal gaming operators.
- State-regulated mobile sportsbooks.
- Locally regulated sports-betting markets.
The state says such an outcome could fundamentally disrupt the existing US betting industry.
Statements
Jennifer Davenport said companies such as Kalshi promote sports betting across all 50 states while refusing to comply with state gambling laws.
The Attorney General argued that Congress did not silently make the sports-betting industry immune from state regulation.
Mary Jo Flaherty, Interim Director of the Division of Gaming Enforcement, said the issue also concerns states’ rights and respect for gambling decisions approved by New Jersey voters.
Consumer Protection
New Jersey authorities argue that state gambling laws provide specific safeguards.
These include:
- Preventing underage gambling.
- Mitigating problem gambling.
- Controls against insider betting.
- Financial supervision.
- Ensuring operators can pay winnings.
- Protecting sports integrity.
The state argues that allowing companies to bypass these laws through CFTC registration could undermine the entire protection framework.
Murphy v NCAA Precedent
New Jersey also pointed to its landmark Supreme Court victory in Murphy v NCAA.
In 2018, the Court struck down the federal prohibition preventing states from legalising sports betting.
That ruling reaffirmed that where Congress does not directly regulate sports gambling, states are free to determine their own approach.
New Jersey argues that Kalshi’s model could effectively reverse that principle.
Industry Context
Prediction markets have become one of the most significant regulatory disputes within US gaming.
The question now extends beyond whether these products economically resemble sports bets.
The central issue is which regulator has jurisdiction and how far state authority extends when sports contracts are offered under federal financial-market legislation.
Conflicting appellate rulings significantly increase the likelihood that the Supreme Court may ultimately establish the governing framework.
Next Steps or Impact
The Supreme Court must first decide whether to hear the case.
If certiorari is granted, its eventual ruling could establish a nationwide precedent governing the relationship between the CFTC, individual states and sports prediction markets.
A decision favouring New Jersey would strengthen state authority to require licences and enforce gambling laws.
A Kalshi victory, by contrast, could establish a nationwide model in which sports contracts are primarily regulated at federal level and fundamentally reshape the structure of the US sports-betting market.
Editó: @fonta
