New Jersey has asked the US Supreme Court to decide whether states can apply their gambling laws to sports event contracts, filing a 332-page petition for a writ of certiorari on 2 September 2026.
The petition was brought by New Jersey Attorney General Jennifer Davenport and Mary Jo Flaherty, interim director of the state’s Division of Gaming Enforcement. It challenges an April 2026 ruling by the US Court of Appeals for the Third Circuit, which blocked New Jersey regulators from enforcing state gambling law against KalshiEX, the exchange that lists contracts on the outcome of sports events.
New Jersey is the first state to take the question to the Supreme Court.
The question the petition puts to the court
At issue is the Commodity Exchange Act, which gives the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over derivatives traded on registered exchanges. Kalshi argues that this displaces state gambling law, so a federally registered exchange can list sports contracts in states where sports betting is licensed, restricted or banned outright.
New Jersey argues that Congress never intended that result. The petition puts the point directly.
Congress did not silently make the sports-betting industry immune from state law.
Davenport put the case in terms of the consumer protections attached to state gambling licences.
States have long adopted careful laws to regulate gambling, including to prevent compulsive gambling, gambling by minors, and insider trading on sports games.
Those are the same controls that licensed US sportsbooks operate under: age verification, self-exclusion, advertising limits, integrity monitoring and market-specific betting restrictions. Under the Third Circuit’s reading, an exchange listing the same outcomes answers to the CFTC instead.
A split between the Third and Ninth Circuits
The petition rests on a conflict between two federal appeals courts.
In April 2026, a Third Circuit panel ruled that Kalshi’s sports event contracts qualify as swaps under federal law. Judge David J. Porter wrote the opinion, which left New Jersey unable to act against the exchange.
On 30 August 2026, the Ninth Circuit ruled the other way, holding unanimously that Nevada can enforce its gambling laws against Kalshi. The same product is therefore subject to state licensing in one part of the country and beyond state reach in another.
Both decisions came out of preliminary injunction proceedings rather than final judgments, which gives the Supreme Court a reason to wait. The court can decline the petition and let the litigation run to conclusion in the lower courts first.
Kalshi’s position
Kalshi has consistently argued that a national exchange cannot be split across state regimes. A company spokesperson, Dani Lever, set out the position.
Kalshi is an open, nationwide financial exchange. It cannot be regulated by 50 different regulators.
Chief executive Tarek Mansour said in June 2026 that the company felt “very confident about the legal analysis” behind its federal registration.
The commercial stakes have grown with the volume. Prediction markets took 27% of US betting handle on the World Cup, according to figures reported in July, a share that puts the exchanges in direct competition with licensed sportsbooks. DraftKings, which now lists prediction contracts of its own, was sued in Massachusetts in July over the same jurisdictional question.
What it changes in Europe
European regulators are not bound by the outcome, and most have not waited for one. Ireland’s regulator threatened High Court action against prediction market operators in July. Spain has blocked Kalshi and Polymarket. Malta and Gibraltar have moved in the other direction, working on frameworks that would license event contracts rather than exclude them.
What a Supreme Court ruling would settle is the argument European operators keep meeting in Brussels and in national consultations: whether a sports event contract is a financial instrument or a bet. A decision for Kalshi would give the exchanges a US precedent to cite in every EU market where they are contesting a block. A decision for New Jersey would remove it.
The Supreme Court is expected to decide this autumn whether to take the case. If it grants certiorari, argument and a ruling would follow by summer 2027. Until then, Kalshi’s sports contracts remain lawful in the Third Circuit and exposed to state enforcement in the Ninth.
Source: New Jersey Office of the Attorney General
