New Jersey Asks US Supreme Court to Hear Kalshi Jurisdiction Fight

New Jersey's attorney general has taken its fight over who regulates prediction-market platform Kalshi to the US Supreme Court.

Cointelegraph reported on September 2 that New Jersey Attorney General Jennifer Davenport and Mary Jo Flaherty, acting director of the state's Division of Gaming Enforcement, filed a petition asking the court to take up the case. They asked the justices to decide whether state regulators or federal agencies have authority over prediction-market platforms offering sports event contracts.

Companies such as Kalshi claim they can offer legal sports betting in all 50 states while following none of those states' gambling laws, Davenport said. She urged the Supreme Court to resolve the issue and confirm that Congress did not quietly exempt the sports-betting industry from state law.

The petition challenges a federal appeals court ruling issued earlier in the case. On April 2, the US Court of Appeals for the Third Circuit, in a 2-1 decision, ruled against New Jersey gaming regulators. The court found Kalshi, as an exchange registered with the Commodity Futures Trading Commission, was likely to succeed in arguing that it is governed by the federal Commodity Exchange Act. In its petition, New Jersey also challenged the CFTC's treatment of sports betting on prediction markets as swaps under its jurisdiction, arguing that federal law does not preempt state sports-gambling laws in any circumstance.

Kalshi spokesman Dani Lever told Cointelegraph that the company cannot be regulated by 50 different agencies. He added that Kalshi remains confident in the lower court ruling and that New Jersey's petition does not change its position.

It is unclear whether the Supreme Court will hear the case. Some experts say the court may first choose a separate prediction-market case pending before an appeals court in Nevada. Whichever case it takes could shape who holds regulatory authority over the broader prediction-market industry.