New Jersey asks Supreme Court to settle Kalshi sports betting fight

New Jersey has taken its legal dispute with Kalshi Sports betting to the US Supreme Court, seeking clarification on whether federally regulated prediction markets must adhere to state sports betting regulations. The state filed a petition for review after a divided Third Circuit halted New Jersey's enforcement of its wagering laws against KalshiEX LLC.

New Jersey argues that the Dodd-Frank Act blocks states from regulating sports contracts offered through Commodity Futures Trading Commission (CFTC)-regulated markets. The state cites the Supreme Court's 2018 Murphy v. NCAA ruling, which stated that "each State is free to act on its own" when regulating sports betting. New Jersey Attorney General Jennifer Davenport and New Jersey Interim Director of the Division of Gaming Enforcement Mary Jo Flaherty filed the petition to hear Kalshi's argument regarding sports event contracts.

Kalshi introduced sports event contracts in January 2025, allowing customers to buy "yes" or "no" positions on various outcomes. New Jersey's Division of Gaming Enforcement issued a cease-and-desist letter in March 2025, targeting both Kalshi and Robinhood, alleging unauthorized sports wagering. The regulator demanded that wagers from New Jersey residents be voided and specifically raised restrictions involving local college teams and events.

Kalshi challenged the enforcement in federal court, and a district judge blocked it. However, the Third Circuit later ruled that qualifying contracts were swaps covered by the CFTC's exclusive authority. The legal landscape changed when the Ninth Circuit reached the opposite conclusion on August 28, declaring Kalshi's offerings to be sports gambling, regardless of the term used.

The Ninth Circuit also stated that Dodd-Frank cannot be used to regulate sports gambling, allowing Nevada to enforce its gambling laws while the litigation continues. New Jersey's filing follows conflicting appellate rulings over state gambling authority in Kalshi cases, with at least 39 lawsuits across 20 states now affected. Kalshi disputes the rulings, stating that the CFTC's exclusive jurisdiction preempts state law and that the lower courts' decisions don't change its stance on the matter.