New Jersey Takes Prediction Markets Fight to Supreme Court - Blockonomi
by Maxwell Mutuma · BlockonomiTLDR
Table of Contents
- TLDR
- New Jersey Challenges Prediction Markets Ruling
- Supreme Court Review Remains UncertainGet 3 Free Stock Ebooks
- New Jersey has asked the U.S. Supreme Court to review who has authority over prediction markets and sports-related event contracts.
- The state is challenging an April Third Circuit ruling that placed Kalshi’s contracts under federal commodities law.
- The Ninth Circuit recently reached a different conclusion, creating a split between federal appeals courts over prediction market regulation.
- New Jersey argues that sports event contracts should remain subject to state gambling laws, even when offered through CFTC-registered platforms.
- Kalshi maintains that it operates as a nationwide financial exchange and says federal CFTC oversight should preempt state rules.
New Jersey has asked the U.S. Supreme Court to settle a growing legal fight over prediction markets and sports-related event contracts. The state wants the court to decide whether federal commodities law blocks states from applying their own gambling rules to these platforms.
The petition follows conflicting federal appeals court rulings that have created uncertainty over who should regulate prediction markets. New Jersey argues that states should retain authority over sports betting within their borders, while Kalshi says federal law gives the Commodity Futures Trading Commission exclusive control.
New Jersey Challenges Prediction Markets Ruling
New Jersey asked the Supreme Court to review an April decision from the Third U.S. Circuit Court of Appeals. That court ruled that Kalshi’s event contracts fall under the Commodity Exchange Act and that federal law preempts New Jersey gambling rules.
Attorney General Jennifer Davenport said prediction market firms should not avoid state sports-betting laws simply by operating on a CFTC-registered exchange. New Jersey’s petition argues that Congress did not remove state authority over sports wagering when it passed the Dodd-Frank Act in 2010.
The legal dispute widened after the Ninth U.S. Circuit Court of Appeals reached a different view last week. That court said the Commodity Exchange Act likely does not preempt Nevada rules covering sports-related event contracts.
The Ninth Circuit also rejected requests from Kalshi and Crypto.com for relief against the Nevada Gaming Control Board. Its ruling conflicts with the Third Circuit decision, creating a split between federal appeals courts over how sports contracts should be classified and regulated.
Supreme Court Review Remains Uncertain
Kalshi said it disagrees with New Jersey’s filing and continues to view itself as a nationwide financial exchange. Company spokeswoman Dani Lever said the platform cannot operate under 50 separate regulatory systems and argued that the CFTC has exclusive jurisdiction.
A Supreme Court review is not guaranteed. The justices receive many petitions each term and may wait for more lower courts to rule. Bank of America said the court could delay action until next year because other federal cases remain pending.
The dispute has also drawn support from many state officials. Forty-four state attorneys general say sports event contracts amount to sports betting and should remain under state oversight.
Shares of DraftKings and Flutter Entertainment, FanDuel’s parent company, rose more than 5% after New Jersey filed its petition during trading following the legal development Tuesday.
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