New Jersey escalates Kalshi dispute to Supreme Court

• New Jersey Attorney General Jennifer Davenport has filed the first certiorari petition asking the US Supreme Court to rule on whether prediction markets must follow state sports-betting laws.
• The case turns on Kalshi, which self-certifies its sports contracts with the Commodity Futures Trading Commission rather than seeking state gaming licences.
• Commercial sports betting generated $16.89 billion in revenue across US states in 2025, excluding tribal casinos, and 95% of Kalshi’s 2025 revenue came from sports wagering.

New Jersey Attorney General Jennifer Davenport has filed a petition for writ of certiorari with the US Supreme Court, asking the justices to decide whether prediction-market platforms such as Kalshi can offer sports wagers without following state gambling laws.

Filed on 2 September 2026, it is the first certiorari petition on the legality of this business model to reach the nation’s highest court.

Circuit courts split

Kalshi’s sports contracts have drawn litigation in at least 20 states, with several states’ gambling laws currently blocked by federal courts.

The CFTC has separately sued Arizona, Minnesota, Wisconsin, Illinois, New York and Connecticut, arguing that the Commodity Exchange Act overrides their enforcement powers. In February 2026, the agency filed an amicus brief opposing Nevada’s own bid to regulate sports event contracts directly.

The Third Circuit ruled 2-1 for Kalshi in April 2026, finding that New Jersey’s gambling laws were likely preempted by federal commodities law. The Ninth Circuit ruling went the other way, 3-0, on 28 August 2026, holding that bets on sporting outcomes sit outside the CFTC’s exclusive jurisdiction. New Jersey co-led an amicus brief in that case, joined by 39 other jurisdictions.

The disagreement is not confined to American courts. Canadian regulators have already ruled that Kalshi-style contracts belong under gaming law rather than securities rules, a finding New Jersey’s filing cites directly as evidence that sports wagering reads as gambling wherever regulators examine it closely.

States build a coalition

Jennifer Davenport, Attorney General of New Jersey, said:

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

New Jersey’s Division of Gaming Enforcement echoed the position. Mary Jo Flaherty, its Interim Director, said:

“This is a states’ rights issue. In New Jersey, gaming is prohibited by its Constitution, other than for exceptions approved by New Jersey voters.”

The petition puts the coalition opposing Kalshi’s legal theory at 44 states, alongside hundreds of tribes and casinos. Separately, in July 2026, a coalition of 44 attorneys general, led by Ohio, wrote to the CFTC arguing its proposed rule on sports event contracts exceeded the agency’s statutory powers.

Congress has its own vehicle too: the Prediction Markets Are Gambling Act, carried by Representatives Steven Horsford and Mark Amodei with a Senate companion from Adam Schiff, John Curtis and Catherine Cortez Masto, would bar federally regulated platforms from listing sports and casino-style contracts at all.

Industry adds pressure

Individual states have kept fighting on their own terms too, including a Connecticut lawsuit and a Washington geofencing order. Licensed operators have joined the chorus from a different angle.

Executives from DraftKings, Fanatics and FanDuel pressed the CFTC for aligned prediction rules, warning that mismatched oversight leaves bettors with weaker protections than a state-licensed sportsbook would offer.

Kalshi has not moved from its position. Spokeswoman Dani Lever said:

“Kalshi is an open, nationwide financial exchange. It cannot be regulated by 50 different regulators.”

What is at risk

New Jersey’s petition argues a win for Kalshi would remove state protections against underage betting, compulsive gambling and insider trading in one motion. It goes further still, warning that licensed sportsbooks in Atlantic City, Las Vegas and on tribal land could face their own legal exposure, since trading swaps off CFTC-registered markets is itself barred under federal law.

New Jersey has been here before. Its 2018 Supreme Court win in Murphy v. NCAA established that states, not Congress, decide whether to permit sports betting within their borders.

Kalshi’s nationwide model, live in all 50 states, tests whether that ruling still carries weight against a federally registered exchange.

Money and behaviour are moving fast around the case. Kalshi’s annualised revenue has grown past $2 billion, and its ambitions stretch past sports into a weather market now pacing toward $1.1 billion in trading this year.

Younger traders are closing the gap between the two activities on their own: a Betterment survey found 26% of Gen Z investors already treat sports betting as part of their long-term financial strategy, precisely the overlap New Jersey’s filing says state consumer-protection law exists to manage.

Kalshi currently has friends in high places. Executives from the sector attended a White House meeting alongside crypto industry figures last month, a sign of the administration’s tolerance for the format.

A decision on whether to grant certiorari could come as early as this autumn, and it will settle whether that tolerance can survive a direct legal test.