New Jersey asks US Supreme Court to decide who regulates prediction markets

New Jersey’s Attorney General and the state’s interim director for the Division of Gaming Enforcement have petitioned the US Supreme Court to take up a case over prediction market companies, with Kalshi at the center of the dispute. For PSPs and platforms watching high-risk flows, the real issue is jurisdiction: whether CFTC registration shields a product from state gambling law, or whether both sets of rules can bite at once.

1. On Wednesday, Attorney General Jennifer Davenport and gaming enforcement interim director Mary Jo Flaherty filed a petition for a writ of certiorari asking the Supreme Court to review New Jersey’s enforcement action against Kalshi over sporting event contracts. The state is asking the court to settle whether prediction market companies can comply with the Commodity Futures Trading Commission (CFTC) while still violating state law.
2. New Jersey’s filing cites civil cases brought by gaming authorities in “at least 20 states” and argues that companies like Kalshi cannot offer sports betting nationwide while refusing to follow state gambling laws. Davenport said the companies have “no right to offer their sports bets without following state law,” and asked the Supreme Court to recognize that Congress did not make the sports-betting industry immune from state law.
3. The petition puts one specific question in front of the court: whether the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act preempted states from regulating sports bets that occur within their jurisdictions if those bets are offered on markets registered with the CFTC. In plain English, New Jersey wants a ruling on whether federal registration overrides state-level gambling enforcement.
4. The filing also challenges an April opinion from the US Court of Appeals for the Third Circuit, where judges ruled 2-1 against New Jersey’s gaming authorities and accepted Kalshi’s argument that it had a “reasonable chance of success” in claiming the CFTC’s Commodity Exchange Act preempted state law. New Jersey says federal law does not preempt state sports-gambling laws “regardless,” and also disputes the CFTC’s view that sports bets on prediction market platforms are “swaps” under its authority.
5. New Jersey’s announcement warned that if Kalshi wins, then sports gambling off CFTC-registered markets could “seemingly become illegal” even where state law allows it, because federal law prohibits trading swaps off CFTC-registered markets. Kalshi spokesperson Dani Lever told Cointelegraph the company disagreed with New Jersey’s move to the Supreme Court, saying it could not be “regulated by 50 different regulators,” and added that Kalshi remains confident in the lower courts’ rulings.

The CFTC did not immediately respond to Cointelegraph’s request for comment. For high-risk operators, the practical takeaway is simple: if the Supreme Court takes the case, the answer could shape whether prediction markets are treated as a federally governed product category or as just another way to run into state gambling law one jurisdiction at a time.