New Jersey Takes Prediction Markets to the Supreme Court in a High-Stakes Fight Over Sports Betting

New Jersey Takes Prediction Markets to the Supreme Court in a High-Stakes Fight Over Sports Betting
New Jersey is asking the Supreme Court to settle a regulatory fight that could determine whether prediction-market platforms operate as financial exchanges—or as sports-betting businesses subject to state control.

The state’s petition places the dispute at the intersection of federal authority and traditional gambling regulation. The conservative framing emphasizes New Jersey’s effort to force a national answer on sports-betting oversight, while the state presents the case as a defense of its power to enforce gambling laws.

The legal conflict intensified after two federal appeals courts reached opposing conclusions. The 3rd U.S. Circuit Court of Appeals ruled in April that event contracts are derivatives regulated by the Commodity Futures Trading Commission. The 9th Circuit later held that sports-related contracts are not CFTC-regulated “swaps,” rejecting appeals by Kalshi and Crypto.com against Nevada regulators.

New Jersey Attorney General Jennifer Davenport argues that Congress never quietly stripped states of their authority. “We’re calling on the Supreme Court to resolve this issue and recognize that Congress did not silently make the sports-betting industry immune from state law,” she said.

Kalshi offers the opposite interpretation. The company says it is a nationwide financial exchange and cannot face a patchwork of rules from 50 state regulators. Its spokeswoman, Dani Lever, said the lower courts correctly found that the CFTC’s exclusive jurisdiction preempts state law.

The stakes extend beyond New Jersey and Kalshi. The CFTC and 44 state attorneys general disagree over whether these contracts are financial instruments or wagers. Conflicting circuit rulings give the Supreme Court a clear jurisdictional dispute, but Bank of America cautioned that the justices could wait while other cases proceed.