New Jersey could be preparing to ask the U.S. Supreme Court to take up its prediction markets case against Kalshi, according to local reporting, setting the stage for the high court to decide who truly regulates event contract platforms.
New Jersey is one of many states fighting lawsuits against prediction markets operators and the Commodity Futures Trading Commission over the regulatory jurisdiction of the exploding industry.
The Press of Atlantic City first reported that the state has asked for a deadline extension to ask for the court to take up the case. The move comes after the 3rd U.S. Circuit Court of Appeals ruled in April that New Jersey gaming regulators cannot stop Kalshi from offering sports event contracts in the state.
With a Nevada case already moving through the 9th Circuit on a very different track, New Jersey’s hinted Supreme Court petition could be the moment prediction markets’ jurisdiction fight finally reaches the top.
What New Jersey is planning
According to the report, New Jersey attorneys have signaled they intend to seek Supreme Court review of the 3rd Circuit’s decision in Kalshi v. Flaherty, the case where Kalshi sued the Division of Gaming Enforcement after receiving a cease‑and‑desist letter.
A joint status filing in federal court already asks the trial judge to keep the case on hold “pending any decision by the U.S. Supreme Court” on New Jersey’s petition, underscoring that the state is serious about going up.
If New Jersey files and the justices agree to the request, it would be the first prediction markets case the Supreme Court has taken and could become the base case on whether state gambling laws can apply to CFTC‑regulated sports, election and entertainment contracts.
The 3rd Circuit: Kalshi win, CFTC preemption
In April, a divided 3rd Circuit panel upheld a preliminary injunction blocking New Jersey regulators from enforcing their cease‑and‑desist order against Kalshi. A 2‑1 ruling held that Kalshi’s sports event contracts are “swaps” traded on a CFTC‑regulated designated contract market, and that the Commodity Exchange Act gives the federal regulator exclusive authority over those markets.
The decision was the first federal appellate ruling in the prediction markets jurisdiction fight and explicitly framed state attempts to treat event contracts as gambling as preempted by federal law.
The ruling allows Kalshi keep offering sports contracts in New Jersey without a state gaming license while the broader legal battle plays out.
Nevada and the 9th Circuit: a different path
A Nevada case is moving in the opposite direction and could create the circuit split New Jersey is now aiming to put in front of the Supreme Court.
Kalshi filed a preemptive federal suit in Nevada after the state sent a cease‑and‑desist letter. It initially won a preliminary injunction in April 2025, but the same judge dissolved that order in December 2025, ruling that sports‑related event contracts look more like illegal betting than federally preempted swaps.
Nevada later extended a preliminary injunction blocking Kalshi from offering sports, election or entertainment event contracts without a gaming license, and a similar injunction was issued against Polymarket in June.
Kalshi appealed to the 9th Circuit, which heard arguments in April 2026. The court allowed Nevada’s enforcement case to proceed. Meanwhile, the CFTC filed an amicus brief telling the 9th Circuit that states are “invading” its exclusive jurisdiction by re‑characterizing swaps as illegal gambling.
A 9th Circuit ruling siding with Nevada would directly conflict with the 3rd Circuit’s New Jersey decision, creating a circuit split the Supreme Court often looks for when deciding whether to take a case.
New Jersey’s own prediction markets bill
While it fights Kalshi in court, New Jersey is also working on a legislative path. Lawmakers introduced a bill that would create a state licensing framework for prediction markets, including sports contracts.
If passed, the bill creates a 9% tax rate on prediction markets operators.
Senate lawmakers gave S 4447 a second reading Sunday. It still needs to pass the Senate and the Assembly before heading to a governor. Even Gov. Mikie Sherrill signs the bill, the state would need to reconcile with whatever federal preemption rules the courts ultimately establish.
Other states already fighting Kalshi, others
New Jersey is not alone. Kentucky, Illinois, Minnesota and a growing list of other states have passed laws or taken regulatory actions against prediction markets and have found themselves sued by the CFTC or in direct conflict with the agency’s view of its authority.
The CFTC has filed lawsuits against multiple states over their attempts to apply gambling laws to event contract platforms attempting to assert its “exclusive jurisdiction” over commodity derivatives, including prediction markets.
That broader campaign has triggered sharp pushback from state officials and lawmakers who argue that states have the power to regulate gambling‑like activity inside their borders.
Why a Supreme Court case matters
The New Jersey appeal could become the vehicle for answering the fundamental question that looms over the prediction markets industry: Are event contracts federally regulated financial products, or are they gambling subject to state law?
For operators like Kalshi and Polymarket, a Supreme Court ruling could either cement CFTC preemption and give them a clearer national framework, or open the door to state‑by‑state patchwork rules that look much more like sports betting. For states, the outcome would determine whether they can tax, regulate or even ban prediction markets on their own terms.
New Jersey helped bring sports betting to the Supreme Court the last time this kind of question came up. Now it appears ready to do the same thing for prediction markets.
