New Jersey has now formally asked the nation’s highest court to settle a growing dispute over who has the power to oversee sports wagering that takes place on prediction-market platforms. On September 2, 2026, Attorney General Jennifer Davenport filed a petition for a writ of certiorari seeking review of an April ruling by the US Court of Appeals for the Third Circuit.
That 2-1 decision held that federal law preempts New Jersey’s sports-gambling statutes when bets are structured as event contracts traded on a market registered with the Commodity Futures Trading Commission (CFTC).
The conflict began in 2025 after the state’s Division of Gaming Enforcement issued a cease-and-desist notice to Kalshi, arguing the company was offering unauthorized sports wagers, including bets on college games that New Jersey’s constitution restricts.
Kalshi sued, contending its contracts are “swaps” subject solely to CFTC oversight under the Commodity Exchange Act as amended by the 2010 Dodd-Frank law.
The Third Circuit agreed that New Jersey could not apply its licensing, consumer-protection, and age restrictions to the platform.
Davenport’s petition argues Congress never intended a financial-reform statute to strip states of authority they have long exercised over gambling.
She noted that prediction market operators market themselves as offering legal sports betting nationwide while declining to follow any state’s rules on problem-gambling safeguards, underage participation, or insider information.
Dozens of states from across the political spectrum have taken similar positions, viewing the contracts as functionally identical to traditional sports bets.
The timing of the filing is significant.
Days earlier, the Ninth Circuit reached the opposite conclusion in a related Nevada case, holding that sports-outcome contracts do not fall within the CFTC’s exclusive jurisdiction and that states may require gaming licenses.
That circuit split, New Jersey contends, makes Supreme Court review necessary to produce a uniform national rule.
The state also invokes the Supreme Court’s 2018 decision in Murphy v. NCAA, which restored to the states the power to legalize and regulate sports betting after striking down a federal ban.
New Jersey maintains that a later financial statute should not be read as silently reversing that allocation of authority.
Prediction markets have grown rapidly, allowing users to trade on sports results, elections, and other events.
Operators insist they are federally regulated financial exchanges that cannot reasonably be subject to 50 different state regimes. State officials counter that without local oversight, protections against addiction, youth gambling, and market integrity would disappear.
The justices have not yet decided whether to grant the petition.
If they do, the case could become the first Supreme Court ruling on the regulatory status of these platforms and would likely be decided in 2027. Until then, the legal patchwork continues: some circuits treat the products as federally preempted swaps, while others treat them as state-regulated gambling.