NJ Asks Supreme Court on Sports Prediction Markets

New Jersey has asked the U.S. Supreme Court to decide whether states can regulate sports prediction markets, a move that could reshape the burgeoning industry. The state filed a petition on September 2, seeking to overturn a federal appellate court ruling that favored prediction market operator Kalshi. The core of the dispute centers on whether federal commodities law preempts state gambling regulations when applied to sports-related contracts offered on platforms registered with the Commodity Futures Trading Commission (CFTC). The legal battle intensified following conflicting decisions from two federal appeals courts. In April, the Third U.S. Circuit Court of Appeals ruled that Kalshi's sports event contracts likely qualify as swaps under the Commodity Exchange Act, suggesting that the CFTC's exclusive jurisdiction could override state laws. This decision affirmed a preliminary injunction that had stopped New Jersey regulators from enforcing state gambling laws against Kalshi. However, a separate ruling on August 28 by the Ninth U.S. Circuit Court of Appeals reached a different conclusion.