The state's cert petition sets up a fight over whether a 2010 federal law shields prediction-market platforms from all 50 states' gambling laws, with Kalshi calling the alternative unworkable and New Jersey calling it lawless.
New Jersey has asked the US Supreme Court to take up a case testing whether the Commodity Exchange Act, as amended by the 2010 Dodd-Frank Act, preempts states from regulating sports-outcome contracts offered on CFTC-registered exchanges like Kalshi. The petition follows a Third Circuit ruling that split 2-1 in Kalshi's favor.
New Jersey Attorney General Jennifer Davenport put the state's position bluntly: "Nothing in the Act gives the CFTC unprecedented authority to become the sole regulator of sports gambling," and prediction-market providers "have no right to offer their sports bets without following state law." Kalshi spokeswoman Dani Lever countered that "Kalshi is an open, nationwide financial exchange. It cannot be regulated by 50 different regulators."
The stakes extend well past this one case. Sports-betting-style contracts make up more than 80% of prediction-platform weekly trading volume, and Connecticut separately sued Kalshi on August 27 over alleged unlicensed sports betting, a second state now pursuing the same underlying question through litigation. Kalshi was earlier this year reported to be in talks to raise capital at a roughly $40 billion valuation, nearly double its valuation in May, a figure that assumes the current regulatory structure holds.
If the Supreme Court grants certiorari and rules for the states, Kalshi and similar platforms could be forced to seek licenses state by state, a materially different business than the single, federally regulated national exchange model Kalshi has built. If the Court declines the case or rules for Kalshi, the current model stands, at least until the next state brings its own challenge.