New Jersey Fights Federal Overreach in Supreme Court Sports Betting Case
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New Jersey has petitioned the Supreme Court to defend states’ rights to regulate sports betting on platforms like Kalshi, pushing back against federal agencies and activist courts that threaten state sovereignty.
New Jersey has filed a petition with the U.S. Supreme Court, standing up for states’ rights to control sports betting on prediction-market exchanges. The state contends that the 2010 federal law granting the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over swaps does not give unelected federal bureaucrats the power to override state authority and local values regarding gambling.
This action follows a split among federal appellate courts. In April, the 3rd U.S. Circuit Court of Appeals sided with federal regulators, ruling that contracts tied to sports outcomes are 'swaps' and thus fall under CFTC jurisdiction, stripping states of their right to regulate gambling within their borders. In contrast, the 9th Circuit last week upheld Nevada’s right to block Kalshi from offering such bets, recognizing that labeling sports wagers as swaps doesn’t change their fundamental nature as gambling, which states have every right to control.
New Jersey Attorney General Jennifer Davenport pointed out that this issue has spread to at least 20 states, with dozens of lawsuits pending, and called the case the first certiorari petition on the legality of this business model. The petition asks the Court to decide whether the Dodd-Frank Wall Street Reform and Consumer Protection Act, a bloated federal law, can be used to trample on state sports-betting laws when bets are offered on CFTC-registered markets.
Legal experts note that the split between the circuits makes it more likely the Supreme Court will step in. If the Court sides with the 3rd Circuit and federal agencies, companies like Kalshi could bypass state laws and push gambling nationwide, undermining local control. If the Court follows the 9th Circuit, states will maintain their constitutional right to enforce their own gambling statutes and protect their citizens from federal overreach.
The petition also argues that even if sports bets are classified as swaps, the CFTC’s exclusive jurisdiction applies only to federal agencies and does not erase states’ longstanding police powers over gambling, which have been repeatedly recognized in federal law. This case is a critical test of whether states or Washington bureaucrats will decide how Americans live.