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New Jersey takes Kalshi sports betting fight to Supreme Court

3 September 2026
(PRESS RELEASE) -- Attorney General Jennifer Davenport filed a petition with the U.S. 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. This is the first certiorari petition filed with the U.S. 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.

“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. States have long adopted careful laws to regulate gambling, including to prevent compulsive gambling, gambling by minors, and insider trading on sports games. 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.”

“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. But Kalshi does not abide in any way with our State’s gaming laws,” said Division of Gaming Enforcement Interim Director Mary Jo Flaherty. “This is a states’ rights issue. In New Jersey, gaming is prohibited by its Constitution, other than for exceptions approved by New Jersey voters. In this case, the State is upholding the will of New Jerseyans regarding the manner in which gaming can be conducted.”

The stakes of this case are exceptionally high. In 2025, sports betting generated $16.89 billion in revenue for States nationwide, not even including sportsbooks in tribal casinos. Indeed, 95% of Kalshi’s revenue in 2025 came from sports betting. At issue in this case is whether the States can still regulate this major economic industry, or whether the sole regulatory body for companies like Kalshi is the CFTC, which has admitted that it is not a gaming regulator and has no specialized expertise in overseeing gaming. That is why 44 States, hundreds of Tribes, and casinos have all already weighed in to oppose Kalshi’s and the other prediction markets’ litigation theories.

The particular issue is whether Congress in enacting the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act intended to federalize a multi-billion-dollar sports-wagering industry. Kalshi claims that it did, so in 2025, the company sued New Jersey, claiming that it could offer sports gambling in the State without following New Jersey’s rigorous gambling laws because its sports wagers are actually “swaps” that can only be regulated by the CFTC. In April 2026, the Third Circuit, by a 2-1 vote, ruled in Kalshi’s favor, holding that New Jersey’s state gambling laws are preempted.

The vast majority of federal and state courts around the country have disagreed and instead overwhelmingly rejected the argument that such sports bets have a loophole from state law. The latest win for the States came Friday, August 28, when the Ninth Circuit explicitly disagreed with the Third Circuit and that sports bets on outcomes of a sporting event do not fall within the exclusive jurisdiction of the CFTC. The Ninth Circuit concluded that “Congress did not take a wrecking ball to all sports gambling regulations built up over decades by federal, state, and tribal governments” in a 2010 Wall Street reform bill.

New Jersey co-led an amicus brief in that case, joined by 39 other jurisdictions. The Ninth Circuit cited that amicus brief in holding “it is implausible that Congress intended to allow the CFTC to engage in the national regulation of gambling based on expansive definitions of the words ‘event’ and ‘associated with’ in a Wall Street reform bill.”

The petition also emphasizes the consequences of a ruling in Kalshi’s favor. Because federal law prohibits trading swaps off CFTC-registered markets, a victory for Kalshi would mean that all sports gambling off such CFTC-registered markets would seemingly become illegal even if state law allows it. Such an outcome would make sports wagers at classic sportsbooks like brick-and-mortar casinos — whether in Atlantic City, Las Vegas, or on tribal lands — illegal, and throw the entire industry into turmoil.

States’ gambling laws exist to protect minors, mitigate problem gambling, prevent insider trading, and ensure operators have the financial stability to pay out winnings. If companies like Kalshi can bypass these laws simply by registering with the CFTC, these protections evaporate. For that reason, attorneys general across the country have cautioned that unregulated sports gambling poses serious risks to public health and financial security for millions of Americans.

This is not New Jersey’s first time seeking review on a critical state gaming issue. Eight years ago, the Supreme Court ruled for New Jersey in Murphy v. NCAA, explaining that if Congress elects not to “regulate sports gambling directly,” then “each state is free to act on its own.” Kalshi’s model, which offers sports bets in all 50 States, would upend the promise that each state could decide whether to allow sports wagering within its borders.

This petition to the U.S. Supreme Court 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.

New Jersey takes Kalshi sports betting fight to Supreme Court is republished from iGamingNews.com.


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