New Jersey asked the U.S. Supreme Court on 2 September to review the appellate ruling that stripped it of authority over sports wagers offered on prediction markets. The state and its Division of Gaming Enforcement filed a 332-page petition for a writ of certiorari. According to the Attorney General’s office, it is the first cert petition filed with the Court on the central question in the fight: whether platforms can offer sports wagers nationwide, self-certified with the Commodity Futures Trading Commission, without complying with state gambling law.
New Jersey is not asking the Court to rule in its favour yet. It is asking the Court to take the case, on the grounds that two federal appeals courts now say opposite things and the disagreement will not resolve itself.
The split
In April, a divided Third Circuit panel held that sports bets offered by prediction markets are “swaps” — a derivative that, after the 2010 Dodd-Frank amendments, can only be regulated by the CFTC. That decision preempts New Jersey’s gaming laws and currently bars New Jersey, Delaware and parts of Pennsylvania from regulating these products. Kalshi is the direct beneficiary; it advertises “legal sports betting in all 50 states.”
On 28 August, the Ninth Circuit disagreed. It accepted that the CFTC has exclusive jurisdiction over swaps, but held that the agency lacks the clear congressional authorization needed to classify sports bets as swaps in the first place, and that Congress did not take “a wrecking ball to all sports gambling regulations built up over decades by federal, state, and tribal governments” in a Wall Street reform bill.
New Jersey’s argument
“Companies like Kalshi claim to offer legal sports betting in all 50 States, but they refuse to follow the gambling laws of any State,” said Attorney General Jen Davenport. The filing describes litigation in at least 20 states, with dozens of active suits and several state gambling laws enjoined by federal courts.
The state’s legal case runs on two tracks. The first is that letting the Third Circuit stand would effectively end state regulation of sports betting — including for casinos — that the Supreme Court affirmed in Murphy v. NCAA, because any operator could escape state law by self-certifying with the CFTC. The second is an inversion: Dodd-Frank prohibits offering swaps unless they are registered with the commission, so if the platforms’ reading of the law is correct, state-licensed sportsbooks have been in violation of federal law for most of the past decade. A Kalshi victory, the petition argues, would seem to make every sports wager placed off a CFTC-registered market unlawful, including at casinos in Atlantic City and Las Vegas and at tribal sportsbooks — an outcome that would upend the regulated industry the platforms say they are being compared against.
Underlying both is a regulator question. The alternative to state oversight, the state writes, is an agency that “has admitted that it is not a gaming regulator and has no specialized expertise in overseeing gaming.” State gambling statutes exist to keep minors out, mitigate problem gambling, prevent insider trading on athletic events and ensure operators can pay out winnings.
The state’s own framing is notable. The Division of Gaming Enforcement’s interim director, Mary Jo Flaherty, calls it “a states’ rights issue,” pointing out that New Jersey’s constitution prohibits gaming except where voters have approved exceptions. This is a jurisdictional argument about who decides, not a brief about what gambling does to the people who do it.
Kalshi’s answer
Kalshi’s spokesperson, Dani Lever, said the Third Circuit’s decision is the correct one and that the dissenting court agreed on the key principle of exclusive CFTC jurisdiction. The company’s governing argument is scale: “Kalshi is an open, nationwide financial exchange. It cannot be regulated by 50 different regulators.”
The numbers in the state’s petition sketch what that exchange is. Sports betting generated $16.89bn in revenue for states in 2025, not counting sportsbooks in tribal casinos, and — on the Attorney General’s figures — 95% of Kalshi’s 2025 revenue came from sports betting. The company’s public case is that it is a financial exchange. Its revenue says it is a sportsbook with a federal registration.
One line of commentary, from a former governor who signed New Jersey’s sports betting law and whose administration litigated the federal ban that Murphy struck down: “It’s betting. It’s not an investment. It’s not a commodity,” Chris Christie told the Philadelphia Inquirer, adding that he expected the Court to take the case and the platforms to lose. That is a prediction, not a finding; the Court has not yet acted.
What is and isn’t before the Court
The justices have not agreed to hear anything. If they do, the question is one of statutory construction — what Congress meant by “swap” in 2010 — and the practical result either way will decide whether the consumer protections attached to sports wagering for the past seven years apply to the products that now market themselves as investments. Forty-four states, hundreds of tribes and the commercial casino industry have already filed against Kalshi’s theory. Whoever wins, the enforcement record built in state courts this year — injunctions, fines, disgorgement claims — is what the states will be pointing to.