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New Jersey has asked the U.S. Supreme Court to step in and decide whether states can continue to regulate sports gambling when it is offered through prediction markets.
Attorney General Jennifer Davenport filed a petition for certiorari just days after the Ninth Circuit Court of Appeals rejected prediction markets’ claims, creating a direct split with the Third Circuit’s April ruling that had allowed Kalshi and similar platforms to offer sports event contracts in New Jersey.
The case has drawn national attention because dozens of lawsuits are pending across more than 20 states, and gambling laws in several jurisdictions have already been blocked by federal courts.
Davenport warned that companies like Kalshi are trying to bypass state laws entirely, saying, “These companies have no right to offer their sports bets without following state law, which is why dozens of States across the ideological spectrum have opposed them.”
“We’re calling on the Supreme Court to resolve this issue and recognize that Congress did not silently make the sports-betting industry immune from state law.”
Stakes for state regulation and industry stability
The petition highlights the scale of the issue. In 2025, sports betting generated nearly $17 billion in revenue for states, excluding tribal casinos.
Kalshi itself reported that 95% of its revenue came from sports wagers. At the center of the dispute is whether Congress, through the 2010 Dodd‑Frank Act, intended to federalize sports gambling by placing it under the CFTC.
The Third Circuit’s 2‑1 ruling in April 2026 sided with Kalshi, holding that New Jersey’s gambling laws were preempted. But other courts have rejected this view. Last Friday, the Ninth Circuit ruled that sports bets remain subject to state and tribal regulation, stating that “Congress did not take a wrecking ball to all sports gambling regulations built up over decades by federal, state, and tribal governments.”
New Jersey co‑led an amicus brief joined by 39 other jurisdictions in that case, which the Ninth Circuit cited in its decision.
The petition warns that if Kalshi prevails, traditional sportsbooks in casinos and tribal lands could be deemed illegal, even where state law allows them. Such an outcome would destabilize the entire industry and strip states of their authority to enforce protections against underage gambling, problem gambling, and insider trading, the letter states.
State officials also argue that Kalshi’s model undermines constitutional limits and voter‑approved exceptions in New Jersey. Division of Gaming Enforcement Interim Director Mary Jo Flaherty stressed, “This is a states’ rights issue. In New Jersey, gaming is prohibited by its Constitution, other than for exceptions approved by New Jersey voters.”
The petition also points out that the CFTC itself has admitted it is not a gaming regulator and lacks expertise in overseeing gambling.
The 332-page filing goes on to recall New Jersey’s earlier victory in Murphy v. NCAA, where the Supreme Court ruled that if Congress does not regulate sports gambling directly, each state is free to decide for itself.
