New Jersey Asks Supreme Court to Settle the Kalshi Fight
New Jersey Attorney General Jennifer Davenport filed a petition on September 2 asking the U.S. Supreme Court to decide whether federal commodities law shields Kalshi's sports event contracts from state gambling regulation — a question that two federal appeals courts have now answered in opposite directions.
A direct circuit split
The case turns on whether Kalshi's sports-outcome contracts are "swaps" regulated exclusively by the Commodity Futures Trading Commission, or whether they're unlicensed sports bets subject to ordinary state gambling law. In April 2026, a divided Third Circuit panel ruled in Kalshi's favor, holding that its contracts qualify as federally regulated swaps and upholding an injunction that let the company keep operating in New Jersey without a state betting license. Then, on August 28, a unanimous Ninth Circuit panel reached the opposite conclusion in a separate case out of Nevada, ruling that Kalshi's contracts are bets rather than swaps and that a CFTC rule barring exchanges from listing gaming-related contracts applies to them. New Jersey's petition argues that split between two federal circuits is exactly the kind of conflict the Supreme Court exists to resolve.
What each side is arguing
New Jersey's petition describes Kalshi as a company that "claims to offer legal sports betting in all 50 States" while refusing to follow any state's gambling laws, and argues the outcome "will determine whether a multi-billion-dollar gaming industry can suddenly operate free from state sports-gaming laws." A Kalshi spokeswoman, Dani Lever, has previously described the company as "an open, nationwide financial exchange" that "cannot be regulated by 50 different regulators." The petition also notes that prediction-market operators have already been pulled into litigation in roughly 20 states as courts and regulators split over how to classify these products.
Why it matters to US bettors
Kalshi and competitors like Polymarket have marketed sports event contracts as a way to bet on game outcomes in states where licensed sportsbooks aren't available, arguing federal exchange rules let them operate nationwide without state-by-state betting licenses. Whether the Supreme Court agrees to hear this case — and how it eventually rules if it does — will help settle whether that model can continue as a genuine alternative to licensed sportsbooks or whether states retain the power to block or restrict it the way New Jersey, Nevada, Connecticut, and others have already tried to. For now, the injunction protecting Kalshi's New Jersey operations remains in place while the petition is pending, and nothing changes immediately for bettors in any state.