New Jersey has asked the U.S. Supreme Court to resolve whether sports event contracts offered by prediction markets qualify as federally regulated swaps under commodities law or as wagers subject to state gambling regulation. The petition, filed Wednesday, follows conflicting decisions from the Third and Ninth circuits and asks the justices to address an appellate split with implications for the sports event-contract market.
New Jersey Attorney General Jennifer Davenport argued that companies such as Kalshi offer sports bets nationwide without following state gambling laws. In a statement, Davenport said dozens of states across the ideological spectrum have opposed that approach. Kalshi disagrees with New Jersey’s filing. Spokeswoman Dani Lever described Kalshi as an open, nationwide financial exchange and said the company cannot be regulated by 50 different regulators. Lever also said Kalshi believes the Third Circuit and the District of New Jersey support its position.
The petition asks the Court to overturn the Third Circuit’s 2-1 decision in April in Kalshi’s favor. That ruling found that the Commodity Futures Trading Commission has exclusive jurisdiction over Kalshi’s sports event contracts, preempting New Jersey’s gaming laws. Less than a week before New Jersey’s filing, the Ninth Circuit ruled against Kalshi in the Nevada case. Its 3-0 decision held that Kalshi’s sports event contracts are not swaps under the Commodity Exchange Act and are therefore subject to state gaming regulations.
Violation Detail: Dodd-Frank at the Center
In a 47-page filing, Davenport framed the dispute around whether the 2010 Dodd-Frank Act federalized the sports gaming industry at the expense of state sports-gambling laws. The filing argues that the divided circuit decisions concern whether states can regulate sports bets occurring on CFTC-registered markets and says the practical and legal stakes are significant.
The petition also identifies implications for the Indian Gaming Regulatory Act and the Wire Act. Under the filing’s description, the Indian Gaming Regulatory Act gives tribes the exclusive right to regulate gaming activity on Indian lands when the state where the land is located permits gaming. The Wire Act addresses the use of interstate wire communications, including the internet, to facilitate bets on sporting events, with an exception where wagers are legal in both the sending and receiving states.
A Widening Circuit Split
Additional appeals remain pending. The Fourth Circuit is considering whether Maryland can enforce its gambling laws against Kalshi after hearing the appeal in May. A three-judge appeals panel also heard July arguments in consolidated challenges involving Ohio and Tennessee efforts to regulate prediction markets under state gaming laws.
Nevada Gaming Control Board Chairman Mike Dreitzer said Nevada’s position has remained consistent: products that are, in substance, sports wagers should be subject to state gaming laws. He said Nevada supports innovation and prediction markets, while maintaining that providers of products in the state must comply with its regulatory process.
Penalty or Outcome: Stakes for States and Tribes
New Jersey’s filing says the outcome could affect tribes and casinos that have long offered sports betting through state-licensed sportsbooks. Davenport argued that the legal question will determine who oversees a multibillion-dollar industry. According to the American Gaming Association, sports betting generated $16.89 billion in revenue for states in 2025, excluding sportsbooks in tribal casinos.
Source: CDC Gaming
When he is not analysing the latest compliance updates or dissecting quarterly operator results, Florian follows Bundesliga football closely and maintains a healthy skepticism toward anyone claiming to have cracked a winning betting system. He brings a grounded, insider-aware perspective to his writing and is always more interested in the structural story behind the headline than the headline itself.