New Jersey Asks Supreme Court to Rule on Sports Betting Powers

New Jersey Attorney General Jennifer Davenport has asked the U.S. Supreme Court to review whether prediction markets such as Kalshi can offer sports wagers without complying with state gambling laws. The petition comes after a split among federal courts over the scope of federal authority and the states’ power to regulate sports betting.

New Jersey asks Supreme Court to settle regulatory dispute

TRENTON, September 2, 2026 — New Jersey Attorney General Jennifer Davenport has filed a petition asking the U.S. Supreme Court to determine whether prediction-market platforms can offer sports wagers without complying with state sports-gambling regulations.

The case centers on Kalshi and its business model of offering sports-related contracts that the company has self-certified with the Commodity Futures Trading Commission (CFTC). New Jersey argues that these products constitute sports wagering and therefore remain subject to state gambling laws.

The dispute has spread across the United States, with litigation involving at least 20 states and dozens of pending cases. Several state gambling laws have also been temporarily blocked by federal courts.

If accepted, the case would mark the Supreme Court's first review of the legality of this prediction-market model.

Davenport defends states’ regulatory powers

“Companies like Kalshi claim to offer legal sports betting in all 50 States, but they refuse to follow the gambling laws of any State,” said Attorney General Davenport.

“These companies have no right to offer their sports bets without following state law, which is why dozens of States across the ideological spectrum have opposed them,” she added.

Davenport argued that states have established gambling regulations to address issues including compulsive gambling, underage betting and potential insider trading involving sporting events.

“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,” the attorney general said.

New Jersey says Kalshi bypasses state gaming rules

The New Jersey Division of Gaming Enforcement also criticized Kalshi's approach.

“Kalshi markets itself as the ‘first app for legal sports betting in all 50 States,’ including for wagering on NCAA games held in New Jersey and participated in by New Jersey teams, which is impermissible under New Jersey’s Constitution,” said Division of Gaming Enforcement Interim Director Mary Jo Flaherty.

“But Kalshi does not abide in any way with our State’s gaming laws,” Flaherty added, describing the dispute as a states’ rights issue.

She pointed to New Jersey's Constitution, which generally prohibits gaming except for activities specifically approved by voters, arguing that the state is enforcing those constitutional requirements.

Billions of dollars at stake

The legal dispute could have major consequences for the U.S. gambling industry. According to New Jersey's petition, sports betting generated $16.89 billion in revenue for states nationwide in 2025, excluding sportsbooks operated at tribal casinos.

The filing also states that 95% of Kalshi's revenue in 2025 came from sports betting.

At the heart of the case is whether the CFTC should have exclusive regulatory authority over prediction-market sports contracts, or whether states can continue applying their own gambling regulations.

New Jersey notes that the CFTC itself has acknowledged that it is not a gaming regulator and does not have specialized expertise in overseeing the gambling industry.

The state's position has received broad support. According to the petition, 44 states, hundreds of tribes and casinos have opposed Kalshi's legal arguments.

Dispute centers on Dodd-Frank

The Supreme Court petition focuses on the interpretation of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

Kalshi argues that Dodd-Frank effectively places its sports contracts under federal CFTC jurisdiction, preventing states from applying their gambling laws.

The company sued New Jersey in 2025 after the state sought to prevent it from offering sports wagering without complying with New Jersey regulations. Kalshi argued that its sports contracts are legally “swaps” and therefore fall under the CFTC's exclusive authority.

In April 2026, the U.S. Court of Appeals for the Third Circuit ruled 2-1 in Kalshi's favor, concluding that New Jersey's gambling laws were preempted by federal law.

Ninth Circuit reaches opposite conclusion

The Third Circuit's decision has since come into direct conflict with a ruling from the Ninth Circuit.

On August 28, 2026, the Ninth Circuit rejected the argument that sports wagers on the outcome of sporting events fall within the CFTC's exclusive jurisdiction.

In its decision, the court stated that “Congress did not take a wrecking ball to all sports gambling regulations built up over decades by federal, state, and tribal governments” through the 2010 financial reform legislation.

New Jersey co-led an amicus brief in the Ninth Circuit case alongside 39 other jurisdictions. The Ninth Circuit cited the brief in concluding that it was implausible that Congress intended to give the CFTC nationwide authority over gambling through broad interpretations of the terms “event” and “associated with” in a Wall Street reform law.

Potential impact on traditional sportsbooks

New Jersey's petition also warns that a victory for Kalshi could produce consequences beyond prediction markets.

Because federal law restricts trading in swaps outside CFTC-registered markets, the state argues that accepting Kalshi's interpretation could potentially make sports wagering conducted outside such markets illegal — even where state law expressly permits it.

That could create significant uncertainty for traditional sportsbooks operating in commercial casinos, including establishments in Atlantic City and Las Vegas, as well as sportsbooks on tribal lands.

New Jersey also argues that bypassing state gambling regulations could undermine safeguards designed to protect minors, prevent problem gambling and insider trading, and ensure that operators have sufficient financial resources to pay winning customers.

Case could revisit a key Supreme Court precedent

New Jersey's petition also invokes the Supreme Court's 2018 decision in Murphy v. NCAA, which struck down the federal Professional and Amateur Sports Protection Act's prohibition on state-authorized sports betting.

In that ruling, the Supreme Court explained that when Congress chooses not to “regulate sports gambling directly,” “each state is free to act on its own.”

New Jersey argues that Kalshi's nationwide model could undermine that principle by allowing a federally regulated platform to offer sports wagers across all 50 states regardless of individual state gambling laws.

The petition is led by Solicitor General Jeremy Feigenbaum, Deputy Solicitor General Stephen Ehrlich and Special Assistant Liza Fleming, with support from Deputy Attorneys General Emily Bisnauth, Patrick Jhoo and Vivek Mehta.