The U.S. Supreme Court has officially been asked to weigh in on the rise of sports-related prediction markets.
New Jersey filed a petition for writ of certiorari to the Supreme Court on Wednesday, just ahead of the latest deadline the state was facing to seek such a review.
What the Garden State wants to know is if its sports betting-related laws can be applied to prediction markets, such as those offered by Kalshi, or if federal legislation and regulation trumps that state-level oversight.
It's the first time SCOTUS has been asked to consider the legality of the sports prediction market business, New Jersey said.
"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. "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."
BREAKING: NJ Attorney General files certiorari petition with SCOTUS for court to hear sports prediction market case.
— Nick Devor (@nickdevor_) September 2, 2026
Kalshi, the prediction market operator that prompted New Jersey's filing, said it disagrees with the state.
"Kalshi is an open, nationwide financial exchange," spokeswoman Dani Lever said. "It cannot be regulated by 50 different regulators."
There is no guarantee the Supreme Court grants certiorari, as the judges only do so for around 2% of all cases. Even if it does, it would likely take months for arguments to be made and a decision to be reached. That still leaves prediction markets mostly intact for what is expected to be a big football season.
Still, whatever SCOTUS decides, including if it denies certiorari, it could have massive consequences for the fast-growing business of prediction markets.
Regulatory turf war
Those exchanges, regulated by the Commodity Futures Trading Commission (CFTC), are offering sports-related event contracts for trading all over the U.S. In doing so, they point to federal legislation and regulation that they claim exclusively governs them, and preempts state-level gambling laws.
That has created a massive battle in the courts over the legality of sports event contracts. Many states see sports-related prediction markets as merely sports betting. Prediction market operators and the CFTC, meanwhile, maintain this is all federal turf.
New Jersey sports betting regulators failed in April to get the U.S. Court of Appeals for the Third Circuit to overturn a lower-court decision involving Kalshi. That lower court granted the prediction market operator a preliminary injunction against Garden State regulators seeking to enforce their gambling laws.
However, another federal appeals court, for the Ninth Circuit, sided last week against Kalshi in a similar debate involving the exchange's sports-related event contracts.
Are you there, SCOTUS? It's us, everybody: pic.twitter.com/VAwC0Og6iO
— Geoff Zochodne (@GeoffZochodne) September 2, 2026
New Jersey noted that at least 20 states are involved in prediction market-related litigation, and that there is now an “irreconcilable split” between federal appeals courts.
“That split 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 says. “And given the deep errors made by the Third Circuit … certiorari is urgently needed.”
The official question presented to the Supreme Court is whether the 2010 Dodd-Frank Act, which gave the CFTC authority to regulate swaps, "preempted States from regulating sports bets that occur within their jurisdictions if those bets are offered on markets registered with the Commodity Futures Trading Commission."
Kalshi obviously sees things differently, and says New Jersey's opinion hinges on regulations that the CFTC is already proposing to revamp.
"Both the Third Circuit and the District of New Jersey sided with Kalshi because the CFTC’s exclusive jurisdiction preempts state law," Lever said. "While New Jersey points to a recent decision in the Ninth Circuit, that decision agreed with that key principle. Where it differed, it did so based on a regulation that's in the process of being rewritten. We remain confident in the lower courts’ rulings, and nothing in New Jersey’s filing today changes our view."
