New Jersey petitions Supreme Court over prediction market regulation
New Jersey Attorney General Jennifer Davenport has petitioned the U.S. Supreme Court to rule on whether states can regulate sports betting on prediction markets like Kalshi. The 332-page petition seeks to resolve a fresh federal circuit split: the Third Circuit ruled that federal law preempts state gambling regulations, while the Ninth Circuit recently held that federal law likely does not preempt state authority. Kalshi argues that as a nationwide financial exchange, it cannot be subjected to 50 different state regulators.
New Jersey Supreme Court petition
▪New Jersey Attorney General Jennifer Davenport filed a 332-page petition for a writ of certiorari asking the U.S. Supreme Court to allow states to regulate prediction markets as gambling
▪The New Jersey petition stems from a case initiated when New Jersey issued a cease-and-desist letter to Kalshi alleging violations of state gambling laws, leading Kalshi to sue the state
Federal versus state jurisdiction
▪The U.S. Supreme Court petition asks whether the 2010 Dodd-Frank Act preempted states from regulating sports bets offered on markets registered with the Commodity Futures Trading Commission
▪The Commodity Futures Trading Commission, under Chairman Michael Selig, asserts exclusive jurisdiction over prediction markets and has sued at least nine states over event contract restrictions
Circuit court split
▪The U.S. Court of Appeals for the Third Circuit ruled 2-1 in April 2026 that the Commodity Exchange Act preempted New Jersey state gambling laws regarding Kalshi's sports contracts
▪The U.S. Court of Appeals for the Ninth Circuit ruled in August 2026 that the Commodity Exchange Act likely does not preempt Nevada's authority to regulate sports contracts
Kalshi nationwide operations
▪Kalshi spokeswoman Dani Lever stated that Kalshi is a nationwide financial exchange that cannot be regulated by 50 different state regulators
▪Kalshi self-certified its sports contracts with the Commodity Futures Trading Commission by notifying the agency of compliance rather than seeking prior approval
Industry opposition coalition
▪Three states, including Nevada, Michigan, and Washington, have secured court orders pausing Kalshi's sports contracts, which account for over 80% of weekly volume
▪A coalition of 44 states, Native American tribes, and gaming operators FanDuel and DraftKings oppose prediction sites, characterizing them as unlicensed sportsbooks that evade taxes
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