New Jersey Challenges Corporate Deregulation of Prediction-Market Sports Betting at Supreme Court
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New Jersey has called on the Supreme Court to protect state authority over sports betting on prediction-market platforms like Kalshi, highlighting the dangers of unchecked corporate power and the need for democratic oversight.
New Jersey has filed a petition with the U.S. Supreme Court, seeking to defend state-level regulation of sports bets placed on prediction-market exchanges. The state argues that the 2010 federal law granting the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over swaps should not be used as a tool for corporate interests to override state authority and public welfare protections against gambling exploitation.
This move comes after a split among federal appellate courts. In April, the 3rd U.S. Circuit Court of Appeals sided with financial interests, ruling that contracts tied to sports outcomes are 'swaps,' thus placing them under CFTC jurisdiction and stripping states of their regulatory power. In contrast, the 9th Circuit last week empowered Nevada to block Kalshi from offering such bets, affirming that simply rebranding sports wagers as swaps does not erase their exploitative nature as gambling.
New Jersey Attorney General Jennifer Davenport emphasized the widespread impact of this issue, noting that it has erupted across at least 20 states with dozens of active lawsuits. She described the case as the first certiorari petition regarding the legality of this profit-driven business model. The petition urges the Court to clarify whether the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed to rein in Wall Street abuses, should be twisted to preempt state laws designed to protect communities from the harms of gambling.
Legal analysts point out that the split between the circuits makes Supreme Court intervention more likely. If the Court sides with the 3rd Circuit and Wall Street-aligned interests, companies like Kalshi could operate nationwide without respecting state regulations, putting vulnerable populations at risk. If the Court follows the 9th Circuit, states would retain the power to enforce their own gambling statutes and protect their citizens from predatory financial schemes.
The petition further argues that even if sports bets are classified as swaps, the CFTC’s jurisdiction should not override states’ long-recognized police powers over gambling, which have been affirmed in multiple federal statutes over decades. At stake is whether corporate profit or democratic accountability will prevail in regulating gambling in America.