New Jersey asks Supreme Court to resolve split over prediction-market sports betting

New Jersey filed a petition with the U.S. Supreme Court seeking clarification on whether state gambling laws apply to sports bets placed on prediction-market exchanges. The state argues that a 2010 federal law giving the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over swaps does not preempt state authority over gambling.

The request follows a split among federal appellate courts. In April, the 3rd U.S. Circuit Court of Appeals held that contracts tied to sports outcomes qualify as “swaps,” placing them under CFTC jurisdiction and limiting state regulation. By contrast, the 9th Circuit last week ruled that Nevada could block Kalshi from offering such bets, concluding that labeling sports wagers as swaps does not change their nature as gambling.

New Jersey Attorney General Jennifer Davenport said the case “has erupted across at least 20 states, with dozens of active suits pending,” and described the issue as “the first certiorari petition … regarding the legality of this business model.” The petition asks the Court to determine whether the Dodd-Frank Wall Street Reform and Consumer Protection Act preempts state sports-betting laws when bets are offered on CFTC-registered markets.

Legal analysts note that the disagreement between the circuits increases the likelihood that the Supreme Court will take the case. If the Court sides with the 3rd Circuit, companies like Kalshi could offer sports wagers nationwide without complying with individual state regulations. If it follows the 9th Circuit, states would retain the ability to enforce their own gambling statutes.

The petition also contends that even if sports bets are classified as swaps, the CFTC’s exclusive jurisdiction applies only to federal agencies and does not override states’ police powers over gambling, which have been recognized in multiple federal statutes over decades.