New Jersey is taking its fight with Kalshi to the US Supreme Court, asking the justices to decide whether federally regulated prediction markets must also follow state sports betting rules.
The state has petitioned for review after a divided Third Circuit prevented New Jersey from enforcing its wagering laws against KalshiEX LLC. At issue is whether Dodd-Frank blocks states from regulating sports contracts offered through Commodity Futures Trading Commission-regulated markets.
“For more than a century, the States have been the primary regulators of gambling in this country,” New Jersey said in its petition. It also cited the Supreme Court’s 2018 Murphy v. NCAA ruling, where the justices said “each State is free to act on its own” when regulating sports betting.
Kalshi added sports event contracts in January 2025, letting customers buy “yes” or “no” positions on outcomes ranging from tournament winners to player performances.
New Jersey’s Division of Gaming Enforcement responded with a cease-and-desist letter in March 2025. The regulator also targeted Robinhood, alleging both companies offered unauthorized sports wagering. It reportedly demanded that wagers from New Jersey residents be voided and specifically raised the state’s restrictions involving local college teams and events.
Kalshi then went to federal court. A district judge blocked enforcement, and the Third Circuit later agreed that qualifying contracts were swaps covered by the CFTC’s exclusive authority. During appellate arguments, judges had questioned New Jersey’s position while noting the federal definition of swaps was broad.
Supreme Court New Jersey petition follows conflicting rulings over state gambling authority in Kalshi cases
The legal landscape changed on August 28, when the Ninth Circuit reached the opposite conclusion in Kalshi v. Assad.
According to New Jersey’s petition, the Ninth Circuit said Kalshi’s offerings are “sports gambling, regardless of whether Kalshi calls them swaps.” The court also said that “The Dodd-Frank Wall Street Reform Act cannot be read as a direct (or indirect) regulation of sports gambling.”
That ruling allowed Nevada to enforce its gambling laws while litigation continues and concluded Kalshi was unlikely to succeed on its federal preemption arguments. The Ninth Circuit also emphasized that Kalshi self-certified its sports contracts rather than receiving affirmative CFTC approval.
New Jersey says the conflicting appellate decisions now affect a much broader legal battle, pointing to at least 39 lawsuits across 20 states.
Kalshi defended the rulings it won in New Jersey.
“We disagree with New Jersey’s filing. Kalshi is an open, nationwide financial exchange. It cannot be regulated by 50 different regulators,” said Kalshi spokesperson Dani Lever.
“Both the Third Circuit and the District of New Jersey sided with Kalshi because the CFTC’s exclusive jurisdiction preempts state law. While New Jersey points to a recent decision in the Ninth Circuit, that decision agreed with that key principle. Where it differed, it did so based on a regulation that’s in the process of being rewritten. We remain confident in the lower courts’ rulings, and nothing in New Jersey’s filing today changes our view.”
With federal appeals courts now divided, New Jersey wants the justices to resolve who controls these sports markets. “This Court should grant certiorari,” the state said.
Featured image: Canva
The post New Jersey asks Supreme Court to settle Kalshi sports betting fight appeared first on ReadWrite.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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