GoKawiilNew Jersey yesterday asked the Supreme Court to rule on whether states can regulate sports betting on prediction markets such as Kalshi.
“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 Attorney General Jennifer Davenport said in a press release announcing the lawsuit.
In April, the US Court of Appeals for the 3rd Circuit ruled that New Jersey cannot regulate sports bets on prediction markets. The court determined that sports-related event contracts meet the legal definition of “swaps,” giving the US Commodity Futures Trading Commission (CFTC) exclusive jurisdiction.
New Jersey’s petition to the Supreme Court said, “The issue is one of tremendous practical and legal consequence: Kalshi seeks to federalize the multi-billion-dollar sports betting industry at the expense of every state sports gaming law. And the decision [by the 3rd Circuit] is badly mistaken.”
New Jersey’s petition to the Supreme Court came about a week after the 9th Circuit appeals court ruled that Nevada can stop Kalshi from allowing sports bets. Unlike the 3rd Circuit, the 9th Circuit judges determined that sports betting labeled as swaps is just gambling with a different name.
The split between circuits “has tremendous importance, as it will determine whether a multi-billion-dollar gaming industry can suddenly operate free from state sports-gaming laws,” New Jersey’s petition said.
Circuit split raised odds of Supreme Court taking case
The circuit split dramatically raised the odds that the Supreme Court will step in and determine who’s right, although Kalshi itself reportedly said it won’t allow bets on the case. Davenport’s office said New Jersey’s petition asks the Supreme Court “to hear a question that divided courts nationwide: whether prediction markets can offer sports wagers without following state sports-gambling laws.”
“Litigation regarding these questions has erupted across at least 20 states, with dozens of active suits pending and the gambling laws of several states currently enjoined by the federal courts,” Davenport’s office said. “This is the first certiorari petition filed with the US Supreme Court regarding the legality of this business model—of offering sports wagers self-certified by Kalshi with the Commodity Futures Trading Commission (CFTC) without following state laws.”