New Jersey Asks Supreme Court to Decide Who Regulates Prediction Markets

New Jersey Attorney General Jennifer Davenport filed a 332-page petition on September 2 asking the U.S. Supreme Court to review a ruling that federal commodities law overrides the state’s gambling regulations as applied to Kalshi’s sports-event contracts. The filing puts the dispute over who regulates prediction-market sports contracts before the high court after two federal appeals courts reached opposing conclusions. The Block reported the petition was filed one day before New Jersey’s extended deadline.

New Jersey files certiorari petition

The case is docketed as Flaherty v. KalshiEX. New Jersey is seeking Supreme Court review of the Third Circuit’s April decision in favor of Kalshi, rather than a review of a state gambling enforcement action on its own terms.

The Supreme Court had granted the state an extension on July 24, moving its deadline to September 3. The Court’s docket records that procedural order, but a petition does not by itself mean the Court will take up the case. The Supreme Court docket identifies the extension and the case caption.

Third and Ninth Circuits split on Kalshi

The Third Circuit ruled 2-1 on April 6 that the Commodity Futures Trading Commission has exclusive jurisdiction over Kalshi’s contracts at issue. It held that New Jersey’s sports-gambling laws were preempted as applied to those contracts, providing Kalshi with the ruling New Jersey now wants overturned. The Third Circuit opinion framed the dispute around federal commodities regulation and state gambling restrictions.

Four days before New Jersey filed its petition, the Ninth Circuit reached the contrary conclusion in a Nevada dispute. Its August 28 ruling found that Kalshi’s sports contracts are wagers, not federally protected swaps, allowing Nevada gambling regulators to enforce state law. The Ninth Circuit opinion expressly created a conflict with the Third Circuit’s approach.

That appellate split gives New Jersey’s petition a direct question for the Supreme Court: whether sports-event contracts offered through a CFTC-regulated platform fall exclusively under federal commodities oversight or can also be treated as gambling under state law.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.