New Jersey has formally asked the Supreme Court to weigh in on a legal battle that could reshape how prediction markets are regulated in the U.S., according to a petition filed this week. The state’s attorney general is urging the high court to review an April ruling from the 3rd U.S. Circuit Court of Appeals, which determined that all event contracts—including sports betting—qualify as derivatives and fall under the exclusive oversight of the Commodity Futures Trading Commission (CFTC).
In a statement, New Jersey Attorney General Jennifer Davenport said the state is calling on the Supreme Court to resolve the issue and recognize that Congress did not intend to make the sports-betting industry immune from state law. The petition argues that if a company offers sports bets on a CFTC-registered market, state sports-gambling laws would effectively be swept aside—something New Jersey contends is both legally flawed and harmful to state oversight.
Kalshi, a leading prediction market platform and a central party in the case, pushed back against the filing. In a statement to CNBC, spokesperson Dani Lever said Kalshi disagrees with New Jersey’s position, describing the platform as “an open, nationwide financial exchange” that cannot be regulated by 50 different state regimes. Lever noted that both the 3rd Circuit and the District of New Jersey sided with Kalshi, affirming the CFTC’s exclusive jurisdiction preempts state law. She added that the company remains confident in the lower court rulings.
The dispute is the latest flashpoint in a broader struggle between the CFTC and dozens of states over who gets to oversee prediction markets. The CFTC has classified sports-related event contracts as “swaps,” which would place them under federal derivatives regulation. But 44 state attorneys general argue these contracts are essentially sports betting, making them subject to state gambling laws.
The stakes have intensified in recent days. On Friday, the 9th U.S. Circuit Court of Appeals ruled that sports-related event contracts are not swaps under CFTC jurisdiction, rejecting appeals by Kalshi and Crypto.com for injunctive relief against the Nevada Gaming Control Board. That ruling directly contradicts the 3rd Circuit’s decision, creating the kind of circuit split that often prompts Supreme Court review.
Analysts at Bank of America noted in a Monday report that the split provides an opportunity for the Supreme Court to clarify which regulator should oversee prediction markets. However, the bank cautioned that the Court might wait until next year before hearing the case, as other federal circuits still have pending cases that could inform the issue.
New Jersey’s petition argues that the circuit split justifies certiorari—the Court’s process for deciding which cases to hear—and describes the 3rd Circuit’s decision as “profoundly important” but also “profoundly wrong.”
Investors appeared to react to the news. Shares of gambling operators DraftKings and Flutter Entertainment, which owns FanDuel, both rose more than 5% after New Jersey filed its petition, suggesting the market sees potential upside if states gain more control over sports-related event contracts.
The case could ultimately define whether prediction markets operate as federally regulated exchanges or face a patchwork of state-level gambling rules—a decision with significant implications for companies like Kalshi, Crypto.com, and traditional sportsbooks.
Source: www.cnbc.com — https://www.cnbc.com/2026/09/02/new-jersey-asks-the-supreme-court-to-take-on-prediction-markets-.html
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