New Jersey Attorney General Jennifer Davenport has petitioned the US Supreme Court to block prediction markets like Kalshi from accepting sports wagers without complying with state gambling laws. It is the first attempt to secure a ruling from the highest court on a question that has already divided courts in at least 20 states.
Kalshi argues that its sports bets are 'swaps' regulated exclusively by the federal Commodity Futures Trading Commission (CFTC), not state law. In April 2026 the Third Circuit Court of Appeals sided with the company in a 2-1 decision, ruling that New Jersey gambling laws do not apply to its operations. But on 28 August the Ninth Circuit issued the opposite ruling, stating that 'Congress did not destroy decades of established sports-betting regulation' through the 2010 Wall Street reform act. That position has been backed by 39 jurisdictions, including New Jersey.
The stakes are high. In 2025 sports betting delivered $16.89bn in revenue to states, not counting tribal casinos. Meanwhile 95% of Kalshi's revenue that year came from sports betting. 44 states, hundreds of tribes and casino operators have now opposed the prediction-market business model.
A Kalshi victory would threaten the entire industry. Federal law prohibits trading swaps outside CFTC-registered venues — if bets are classified as swaps, traditional bookmakers in Atlantic City, Las Vegas and on tribal land would technically become illegal. States insist their laws protect minors, prevent problem gambling and stop insider trading. The CFTC has acknowledged it is not a gaming regulator and lacks the relevant expertise.
