The pressure point in New Jersey’s fight with Kalshi is not whether prediction markets are a good idea. It is who gets to regulate them in the United States. That question reached the US Supreme Court in a fresh amicus brief from attorneys general representing 39 states and the District of Columbia, backing New Jersey’s petition for review.
The legal hinge is plain enough once the jargon is stripped off. If Kalshi’s sports-event contracts are treated as financial products governed exclusively by the Commodity Futures Trading Commission under the federal Commodity Exchange Act, state gambling regulators are largely out of the room. If they are still subject to state gambling law, then states can police or block them much as they would any other sports wager. Jurisdiction, here, is the whole fight dressed up as classification.
New Jersey is asking the Supreme Court to review a Third Circuit ruling that favored Kalshi’s position. According to the petition described by Gambling News, that appellate decision treated the contracts as swaps regulated by the CFTC, with the effect that state regulators could not stop them. That does not establish that prediction markets are lawful everywhere, and it does not amount to a nationwide merits ruling from the Supreme Court. It means one federal appeals court read the federal statute in a way that sharply narrows state authority.
The reason the states want the justices involved is less principle than mess. Other federal appeals courts have gone different ways. One Ninth Circuit ruling allowed Nevada to limit sports-related contracts. One Sixth Circuit ruling said Tennessee and Ohio could apply their gambling laws to platforms like Kalshi. The reasoning split as well: some judges disputed whether these contracts are “swaps,” others focused on whether federal law preempts state law even if they are.
That is usually when the Supreme Court starts getting flattered with talk of “urgent clarity.” In this instance, the flattery has a point. A market that can be banned as gambling in one circuit and defended as a federally supervised derivative in another is not operating under a rulebook so much as a weather system.
Tribal gaming interests have also filed separately, arguing the Third Circuit approach threatens revenue protected under tribal-state compacts and the Indian Gaming Regulatory Act. Gambling News also reported that Kalshi has until early November to respond to New Jersey’s petition. Until the Court decides whether to take the case, the only definitive ruling is that there is not one.
Marcus Azzopardi