New Jersey on Tuesday asked the Supreme Court to rule on whether states can regulate sports betting on prediction markets such as Kalshi, in a case that could reshape how billions of dollars in sports wagers are governed across the United States.
"Companies like Kalshi claim to offer legal sports betting in all 50 states, but they refuse to follow the gambling laws of any state," New Jersey Attorney General Jennifer Davenport said.
The case has gained urgency due to a dramatic circuit split. In April, the 3rd Circuit ruled that New Jersey cannot regulate sports bets on prediction markets, finding that sports-related event contracts are "swaps" under the Dodd-Frank Act, giving the CFTC exclusive jurisdiction. But last week, the 9th Circuit ruled the opposite way — that Nevada can stop Kalshi from offering sports bets, finding that betting labeled as swaps is simply "gambling with a different name."
"Placing sports bets, even when called by another name, is still gambling," 9th Circuit Judge Ryan Nelson wrote. Judge Kenneth Lee added that the outcome of a typical sports game is not an "event" with financial, economic, or commercial consequences as the law intends.
The split between circuits has made Supreme Court review highly likely. The petition notes that litigation has erupted across at least 20 states, with dozens of active suits pending and gambling laws currently enjoined by federal courts.
The case carries political dimensions. The Trump administration has backed Kalshi, and the CFTC has filed lawsuits against states to block them from regulating prediction markets. Donald Trump Jr. is an advisor to Kalshi and Polymarket. However, the three 9th Circuit judges who unanimously ruled against Kalshi were all Trump appointees, suggesting the outcome is not a simple partisan question. If the Supreme Court sides with Kalshi, it could mean that state-licensed sportsbooks — including brick-and-mortar casinos — have been violating federal law since Murphy v. NCAA.
