New Jersey has asked the U.S. Supreme Court to rule on whether prediction markets must comply with state gambling laws when offering sports-event contracts. The petition, filed 2 September, seeks to resolve a direct split between two federal appeals courts.
The Third Circuit ruled in April (2:1) that Kalshi's sports contracts qualify as swaps and that the federal Dodd-Frank Act pre-empts state law. The Ninth Circuit reached the opposite conclusion last week in a Nevada case: Kalshi's contracts are not swaps, and federal pre-emption does not apply. Attorney General Jennifer Davenport wrote in the petition: 'Companies like Kalshi claim to offer legal sports betting in all 50 states but refuse to follow the laws of any one of them.'
The state warns that if Kalshi's position is correct and Dodd-Frank federalised sports-betting regulation, then traditional sportsbooks — including land-based casinos operating legally since the 2018 Supreme Court decision in Murphy v. NCAA — 'have apparently been violating Dodd-Frank all along'. Judge Jane Roth flagged the same issue in a dissent to the Third Circuit ruling. New Jersey adds that the interpretation may affect tribal gaming under the Indian Gaming Regulatory Act and the Wire Act.
Twenty states are involved in the dispute, with 44 states, hundreds of tribes, casinos and officials opposing prediction markets. Attorney Daniel Wallach counted 40 court decisions on such cases: 34 in favour of states, six for the markets. Kalshi began offering sports contracts in January 2025. Head of strategic communications Dani Lever said: 'Kalshi is a nationwide financial exchange; it cannot be regulated by 50 different regulators.'
The Supreme Court has yet to decide whether to hear the case. Drawing on the Murphy v. NCAA timeline (petition filed October 2016, decision issued May 2018), a final verdict may come in 2027 or 2028.
