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FollowingNew Jersey petitioned Supreme Court to classify prediction markets as gambling
New Jersey has filed a petition with the U.S. Supreme Court seeking to allow states to classify prediction markets such as Kalshi and Polymarket as gambling. The legal dispute has lasted for two years and is now in the eyes of a Supreme Court justice for the first time.
The petition was filed Wednesday, and the Supreme Court's ruling will ultimately determine whether the multibillion-dollar industry is governed by state gambling regulators or regulated by a single federal agency.
Davenport: Congressional interpretation should be strictly restricted, rather than leaving it to the CFTC
petitioners to ask the justices to overturn the decision of the Philadelphia Court of Appeals for the Third Circuit. The ruling held that the Commodity Futures Trading Commission (CFTC) has exclusive regulatory authority over platforms such as Kalshi and Polymarket and can override New Jersey's gambling laws.
New Jersey Attorney General Jennifer Davenport, a Democrat, said the core of the case is to prevent federal power from crossing the border. "We call on the Supreme Court to resolve this issue and acknowledge that Congress has not in silence exempted the sports betting industry from state law," she said in the statement.
In a filing, her office argued that the Commodity Exchange Act did not give the CFTC the power to "become the sole regulator of sports betting in the United States" and noted that matters related to health and safety have historically been within the jurisdiction of states.
Circuit Court Divergence: Justices may not be able to ignore
New Jersey's lawsuit was filed at the right time. Just a week ago, the Ninth Circuit Court of Appeals ruled 3 - 0 in favor of Nevada, allowing states to regulate the prediction market as sports betting.
The Ninth Circuit Court's ruling disagreed with the Third Circuit Court's opinion. The Third Circuit held that Kalshi's "event contracts" were legally different from sports betting and should be subject to federal regulation. The key point in the matter has now led to divisions between the two appeals courts, and legal experts believe that division is enough reason for the Supreme Court to intervene. The justices may decide whether to accept the case this fall, and if they do, a ruling is expected next summer.
Kalshi happens to be the most popular prediction website in the United States and was also listed on the New Jersey petition. The company said it expected to win the lawsuit. "Kalshi is an open national financial exchange and cannot be regulated by 50 different regulators," spokeswoman Dani Leifer said.
Casinos, tribes and 44 states unite to oppose these platforms
Opposition spans both parties and is widespread. A coalition of 44 states calls these prediction sites unlicensed sports betting, which circumvent the consumer protection rules and tax obligations of traditional gambling.
Native American tribes and established gaming operators have also joined the states. Operators such as FanDuel and DraftKings view prediction sites as competitors taking shortcuts.
Currently, Nevada, Michigan and Washington have obtained court orders to suspend Kalshi's sports contract. Sports betting is the lifeblood of these platforms, accounting for more than 80% of weekly transaction volume.
Why the bets continue to rise
The size of the funds involved has grown rapidly over time. It is reported that the total market trading volume is forecast to soar from US$2 billion in August 2025 to US$38.5 billion, an increase of as much as 1900%.
Kalshi allows cryptocurrency deposits and withdrawals, while Polymarket focuses on on-chain stablecoin guarantees, so if states shut down one by one, it will have an impact on the cryptocurrency market.
CFTC Chairman Mike Selig (Trump Appointed) said his agency has exclusive jurisdiction over the forecasting market and drives its development. This sparked conflicts between the federal government and dozens of states.
