New Jersey Asks U.S. Supreme Court to Review Prediction Market Jurisdiction Case

New Jersey’s attorney general and the state’s interim director for the Division of Gaming Enforcement have petitioned the U.S. Supreme Court to hear a case over whether state authorities or federal agencies have jurisdiction over prediction market companies. On Wednesday, Attorney General Jennifer Davenport and gaming enforcement interim director Mary Jo Flaherty filed a petition for a writ of certiorari tied to New Jersey’s enforcement action against prediction market platform Kalshi over sporting event contracts. The filing said civil cases have been brought by gaming authorities in at least 20 states and asked the court to decide whether prediction market companies can comply with the Commodity Futures Trading Commission (CFTC) while still violating state laws. Davenport said companies such as Kalshi claim to offer legal sports betting in all 50 States but refuse to follow state gambling laws, adding that the Supreme Court should resolve whether Congress made the sports-betting industry immune from state law. According to Cointelegraph, the petition asks whether the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act preempted states from regulating sports bets within their jurisdictions when those bets are offered on markets registered with the CFTC. The petition challenges an April opinion from the U.S. Court of Appeals for the Third Circuit, where judges ruled 2-1 against New Jersey’s gaming authorities and said Kalshi had a reasonable chance of success in arguing that the CFTC’s Commodity Exchange Act preempted state law. New Jersey’s filing also disputed the CFTC’s view that sports bets on prediction market platforms qualify as swaps under the agency’s authority and said federal law does not preempt state sports-gambling laws regardless. The state said a victory for Kalshi would mean sports gambling off CFTC-registered markets would seemingly become illegal even if state law allows it, because federal law prohibits trading swaps off CFTC-registered markets. Kalshi spokesperson Dani Lever told Cointelegraph that the company disagreed with New Jersey’s decision to appeal and said it could not be regulated by 50 different regulators. Lever added that Kalshi remains confident in the lower courts’ rulings and that nothing in New Jersey’s filing changes its view. It is unclear whether the Supreme Court justices will take up the issue, though experts have speculated the court could weigh in on a case that went to the appellate court in Nevada. A decision in the Kalshi case in Nevada, the New Jersey case, or another enforcement action could determine which authorities can regulate prediction markets.