TLDR
- New Jersey has asked the US Supreme Court to decide if states can regulate Kalshi’s sports prediction markets
- The move follows conflicting rulings from two federal appeals courts on the same issue
- New Jersey argues Kalshi is operating illegal sports betting without state licenses
- Kalshi, valued at $22 billion, says its contracts are federally regulated swaps under CFTC authority
- A Supreme Court ruling could affect prediction market operators across all 50 states
New Jersey has formally asked the US Supreme Court to step in and settle a growing legal fight over whether states have the power to regulate sports prediction markets run by Kalshi.
New Jersey asked the Supreme Court to shut down prediction markets in the state, teeing up a potential landmark case where the justices could decide if the highly popular but controversial industry can survive in its current form. https://t.co/t8hLCtmCRm pic.twitter.com/lAMqWM1EYT
— CNN Politics (@CNNPolitics) September 2, 2026
The state filed its petition on September 2, asking the court to overturn an April ruling by the Third US Circuit Court of Appeals. That court had sided with Kalshi, finding that the US Commodity Futures Trading Commission has exclusive authority over the company’s sports event contracts.
New Jersey Attorney General Jennifer Davenport said the companies have no right to offer sports bets without following state law. She said dozens of states across the political spectrum have opposed Kalshi’s position.
A Direct Split Between Courts
The timing of New Jersey’s petition matters. On August 28, the Ninth Circuit Court of Appeals ruled against Kalshi in a separate case involving Nevada. That court found Kalshi’s sports contracts are sports bets, not federally regulated swaps, and said Nevada could apply its own gaming laws.
That decision directly contradicts the Third Circuit’s earlier ruling. When two federal appeals courts reach opposite conclusions on the same legal question, the Supreme Court is far more likely to take up the case.
At least four states, Nevada, Massachusetts, Michigan and Washington, have already won court orders restricting Kalshi’s operations.
What Is At Stake
Kalshi argues that its products are event contracts regulated by the CFTC under the Commodity Exchange Act. The CFTC under the Trump administration has supported that view, suing states that have tried to enforce their own gambling laws against the platform.
New Jersey counters that Congress never intended to hand control of the sports betting industry to a federal agency when it passed the Dodd-Frank Act after the 2008 financial crisis. The state says the law is not clear enough to strip states of authority over a multi-billion dollar industry.
Kalshi was last valued at $22 billion and has been expanding rapidly in the prediction markets space.
The case is formally known as KalshiEX v. Flaherty. The Supreme Court has not yet agreed to hear it.
If the court does take the case, its ruling would affect not just Kalshi but the entire prediction markets industry, which is facing lawsuits and restrictions in multiple states. The court’s next steps are to docket the petition, potentially request a response from Kalshi, and decide whether to grant review.
No hearing date has been set.
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