New Jersey Asks Supreme Court To Rule On Kalshi Sports Bets

New Jersey has asked the U.S. Supreme Court to decide whether prediction market Kalshi can offer sports-event contracts nationwide without complying with state gambling laws, escalating a fight that has already split two federal appeals courts.

New Jersey Attorney General Jennifer Davenport and Mary Jo Flaherty, interim director of the state's Division of Gaming Enforcement, filed a petition for a writ of certiorari on September 2, 2026, asking the justices to overturn an April 2026 ruling from the U.S. Court of Appeals for the Third Circuit. 

That 2-1 decision, KalshiEX LLC v. Flaherty, found that federal law preempts New Jersey's sports-gambling regulations because Kalshi's contracts qualify as swaps regulated exclusively by the Commodity Futures Trading Commission.

"Companies like Kalshi claim to offer legal sports betting in all 50 States, but they refuse to follow the gambling laws of any State," Davenport said in a statement announcing the petition. "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."

Gambling Rather Than Swaps

The petition argues the dispute has produced "a direct, acknowledged, and irreconcilable split between the Third and Ninth Circuits," pointing to a Ninth Circuit ruling on August 28, 2026 that reached the opposite conclusion in a case brought by Nevada, finding that Kalshi's sports-event contracts amount to gambling rather than federally regulated swaps.

"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," Flaherty 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."

Waiting On Supreme Court

New Jersey enacted its Sports Wagering Act after the Supreme Court's 2018 ruling in Murphy v. NCAA struck down the federal ban on state-authorized sports betting, giving states authority to regulate wagering within their borders. 

Kalshi sued New Jersey in 2025 after the state issued a cease-and-desist letter, and won a preliminary injunction that the Third Circuit later affirmed.

New Jersey's petition says litigation over prediction markets' sports contracts has now reached at least 20 states, with the gambling laws of several currently enjoined by federal courts. The Supreme Court has not yet agreed to hear the case.

How Kalshi Describe Themselves

Kalshi describes itself as offering sports-related "event contracts" through a designated contract market registered with the Commodity Futures Trading Commission, rather than traditional sports wagers. 

The company's position rests on the argument that Congress, through the 2010 Dodd-Frank Act's expansion of CFTC oversight over swaps, gave the agency exclusive jurisdiction over its products, displacing state gambling law regardless of how a contract is structured.

Traditional sportsbooks, by contrast, operate under state licenses and must comply with state-specific rules on minimum age, permitted bet types, consumer protection and taxation. 

New Jersey's petition argues that allowing Kalshi's federal designation to override those state frameworks would let prediction markets sidestep the entire regulatory structure that licensed operators are required to follow.