New Jersey has asked the U.S. Supreme Court to decide whether states or the federal government have authority to regulate prediction markets, following conflicting rulings by two federal appeals courts over sports-related event contracts.
The petition challenges an April decision by the 3rd U.S. Circuit Court of Appeals, which found that event contracts are derivatives regulated at the federal level by the Commodity Futures Trading Commission (CFTC).
However, the 9th U.S. Circuit Court of Appeals recently reached a different conclusion, rejecting requests by Kalshi and Crypto.com for injunctive relief against the Nevada Gaming Control Board. In its ruling, the Ninth Circuit said: “Kalshi’s sports event contracts have the hallmarks of sports betting.”
The conflicting decisions have created a circuit split that could prompt the Supreme Court to clarify which regulator has oversight of prediction markets.
“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,” New Jersey Attorney General Jennifer Davenport said.
New Jersey’s petition argues that companies claim “state sports-gambling laws all fall away” when sports bets are offered on a CFTC-registered market. “The Third Circuit’s profoundly important decision is also profoundly wrong,” the petition says.
Kalshi said it remains confident in the lower courts’ rulings. “We disagree with New Jersey’s filing. Kalshi is an open, nationwide financial exchange. It cannot be regulated by 50 different regulators,” Kalshi spokeswoman Dani Lever said.
“Both the Third Circuit and the District of New Jersey sided with Kalshi because the CFTC’s exclusive jurisdiction preempts state law,” Lever added.
A bipartisan coalition of 44 state attorneys general has argued that sports-related event contracts amount to sports betting and should be subject to state regulation.
Bank of America said the Supreme Court could wait until next year to hear the case because related cases remain pending in other federal circuits.
“Based on our conversations with legal experts, we think it is still possible the Supreme Court waits until next year before hearing the case as there are still pending cases in other federal circuits,” the bank said in a note.
The dispute could have wider implications for consumer protections, state tax revenue and the regulatory future of prediction markets, whose leading platforms handle billions of dollars in weekly trading volume.
Original article: https://www.yogonet.com/international/news/2026/09/03/126217-new-jersey-asks-us-supreme-court-to-settle-prediction-market-oversight
