Key Moments:
- New Jersey has submitted a petition to the U.S. Supreme Court following conflicting circuit court rulings on sports betting regulation via prediction markets.
- In 2025, sports betting produced nearly $17 billion in state revenue, not including tribal casino income.
- Kalshi reported that 95% of its revenue derived from sports wagers, intensifying debates on oversight.
Supreme Court Petition Follows Circuit Court Split
New Jersey has called upon the U.S. Supreme Court to decide whether states may continue to regulate sports gambling as it is presented through prediction market platforms. This request comes in the wake of the Ninth Circuit Court of Appeals’ recent rejection of prediction markets’ assertions, directly contrasting with the Third Circuit’s April ruling that supported the ability of companies like Kalshi to offer sports event contracts in New Jersey.
Attorney General Jennifer Davenport’s petition was filed days after the Ninth Circuit decision, highlighting a clear split in federal appellate court interpretations.
Widespread Legal Impact Across the United States
This legal conflict has wider national significance, given that more than 20 states are facing ongoing lawsuits on this issue. In several of these jurisdictions, federal courts have already blocked certain gambling statutes.
Davenport warned, “These companies have no right to offer their sports bets without following state law, which is why dozens of States across the ideological spectrum have opposed them.”
“We’re calling on the Supreme Court to resolve this issue and recognize that Congress did not silently make the sports-betting industry immune from state law.”
Regulatory Stakes and Industry Uncertainty
According to the petition, the scale of the stakes is considerable: sports betting generated close to $17 billion in state revenue during 2025, a figure that does not account for tribal casino operations. Kalshi disclosed that 95% of its income was sourced from sports betting activity.
At the center of the dispute is whether the 2010 Dodd‑Frank Act shifted regulation of sports gambling to federal control by placing it entirely under the jurisdiction of the Commodity Futures Trading Commission (CFTC).
The Third Circuit’s 2‑1 ruling in April 2026 found in favor of Kalshi, holding that New Jersey’s gambling restrictions were overridden by federal law. By contrast, last Friday’s Ninth Circuit opinion concluded that “Congress did not take a wrecking ball to all sports gambling regulations built up over decades by federal, state, and tribal governments,” keeping sports betting under state and tribal regulatory purview.
As part of this litigation, New Jersey led an amicus brief that was joined by 39 other jurisdictions, a brief referenced in the Ninth Circuit’s decision.
Potential Consequences for States and Operators
The state’s petition underscores the risk that if Kalshi’s argument is upheld, conventional sportsbooks located in both casino and tribal territories could potentially become illegal, even in regions where state law currently allows them. Such an outcome threatens the industry’s structure and would eliminate state-level authority to enforce protections around underage gambling, problem gambling, and insider trading, the petition notes.
State officials contend that Kalshi’s business model disregards constitutional limitations and voter-approved exceptions specific to New Jersey. Division of Gaming Enforcement Interim Director Mary Jo Flaherty maintained, “This is a states’ rights issue. In New Jersey, gaming is prohibited by its Constitution, other than for exceptions approved by New Jersey voters.”
CFTC’s Role and Supreme Court Precedent
The filing also observes that the CFTC itself has acknowledged it is not a gaming regulator and lacks the necessary expertise to supervise gambling enterprises.
Within its 332 pages, the petition references New Jersey’s previous Supreme Court success in Murphy v. NCAA, where the Court determined that absent federal regulation, individual states may autonomously decide their own paths for sports gambling.
Legal Developments Table
| Date/Period | Event | Outcome |
|---|---|---|
| April 2026 | Third Circuit Decision | Ruled New Jersey laws preempted; Kalshi permitted |
| Last Friday (relative to article date) | Ninth Circuit Decision | Upheld state and tribal regulation of sports betting |
| 2025 | Sports Betting State Revenue | Nearly $17 billion (excluding tribal casinos) |
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