New Jersey becomes first state to ask Supreme Court to weigh in on prediction markets
New Jersey has petitioned the U.S. Supreme Court to resolve a legal conflict regarding whether federal law preempts state authority to regulate prediction markets. This move follows conflicting rulings from the Third and Ninth Circuit Courts of Appeals, creating a circuit split that complicates the regulatory landscape for platforms like Kalshi.
Why it matters
A Supreme Court intervention is necessary to clarify the jurisdictional boundaries between federal regulators like the CFTC and state gambling laws, which will determine the future viability of prediction markets in the U.S.
The ruling comes months after the Third Circuit Court of Appeals ruled that the Commodity Exchange Act preempted state gambling laws, giving prediction market provider Kalshi, which brought a suit against New Jersey, a win in the judiciary. Different state and federal courts have taken up prediction market cases over the past two years, and their rulings are beginning to split from each other.
“Whether the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act preempted States from regulating sports bets that occur within their jurisdictions if those bets are offered on markets registered with the Commodity Futures Trading Commission,” asks the question at the top of New Jersey’s petition .
Prediction market providers “have no right to offer their sports bets without following state law,” New Jersey Attorney General Jennifer Davenport said in a statement .
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