N.J. Asks Top Court to Resolve States' Power Over Prediction-Market Sports Bets
Commentary by Steven Lofchie
New Jersey Attorney General Jennifer Davenport petitioned the U.S. Supreme Court to decide whether prediction-market platforms can offer sports wagers under CFTC registration without complying with state gambling laws.
It is the first case to reach the Court on Kalshi's practice of self-certifying sports-outcome contracts with the CFTC while bypassing state licensing.
Kalshi sued New Jersey in 2025, arguing its contracts are "swaps" regulated exclusively under the Dodd-Frank Wall Street Reform and Consumer Protection Act, preempting state gambling statutes. A divided Third Circuit panel agreed 2-1 in April 2026. New Jersey's petition contends that ruling conflicts with other courts and misreads Dodd-Frank's scope.
The petition points to a split: on August 28, 2026, the Ninth Circuit held the opposite, ruling that sports-outcome bets are likely not "swaps" and that Kalshi had not shown the CEA preempts Nevada's gaming rules (see prior coverage). New Jersey co-led an amicus brief in that case joined by 39 other jurisdictions. The Ninth Circuit cited it. The state argues the split demands review. It notes that 44 states, hundreds of tribes, and casinos have opposed the prediction markets' theories, with litigation in at least 20 states.
New Jersey warns the stakes reach beyond prediction markets: since federal law bars trading swaps off CFTC-registered exchanges, a win for Kalshi could make traditional sportsbook wagering in Atlantic City, Las Vegas, and tribal lands illegal unless run through CFTC-registered platforms. New Jersey won the last such fight. In Murphy v. NCAA (2018), the Court said that if Congress does not regulate sports gambling directly, each state is free to act on its own.
Commentary
This ought to be a question for Congress, not for the courts. And if 40 states are sufficiently agreed on the appropriate outcome to join in an amicus brief, it would strongly suggest which way Congress will go.