New Jersey Attorney General Jennifer Davenport has filed a petition with the US Supreme Court seeking to assert state authority over sports wagers placed on prediction-market platforms. The filing targets Kalshi, Polymarket and similar exchanges that classify sports contracts as financial derivatives regulated by the federal Commodity Futures Trading Commission rather than as gambling subject to state oversight.
The central question is whether the Dodd-Frank Act of 2010 pre-empts state gambling laws when wagers are offered by CFTC-registered platforms. In April the Third Circuit Court of Appeals sided with Kalshi in a 2-1 decision, while on 28 August the Ninth Circuit unanimously backed Nevada. That circuit split increases the likelihood the Supreme Court will take up the case.
'Congress did not give the sports-betting industry immunity from state law,' Davenport said. Kalshi counters that it operates as a nationwide financial exchange and cannot be regulated by 50 separate jurisdictions. Dani Lever, a Kalshi spokesperson, said both circuit rulings affirm the CFTC's exclusive jurisdiction.
The financial stakes are significant. Legal sports betting generated nearly $17bn in revenue for US states in 2025. Kalshi and Polymarket together recorded over $45bn in trading volume in August — a different metric, but comparable in scale. The American Gaming Association estimates that prediction markets have cost states more than $1.3bn in lost tax revenue. Kalshi's valuation has reached $40bn, Polymarket's $21bn.
The Supreme Court receives 7,000 to 8,000 petitions per year and grants around 1%. Four of the nine justices must vote to hear a case; five current justices sat on the 2018 ruling that struck down PASPA. Polymarket assigns a 41% probability that the court will agree to hear a prediction-market case by 31 December. CFTC Chair Michael Selig has defended the legitimacy of the platforms and the commission's regulatory role, but opponents note that proposed rule changes would still permit sports contracts.
