New Jersey has asked the US Supreme Court to decide whether states or the federal government should regulate sports betting offered through prediction markets, escalating a growing legal dispute over the boundaries of gambling and financial exchanges.
New Jersey Attorney General Jennifer Davenport filed a 332-page petition for a writ of certiorari on Wednesday. The formal application asks the Supreme Court to review a decision by a lower court in a case involving prediction markets platform Kalshi.
The dispute began last year, when New Jersey sent Kalshi a cease-and-desist letter. State officials alleged that the company was breaching New Jersey’s gambling laws by offering sports-related contracts on its platform.
Kalshi responded by suing New Jersey. The case was later considered by the US Court of Appeals for the Third Circuit, which ruled in Kalshi’s favour.
New Jersey is now asking the Supreme Court to intervene. The justices must first decide whether to accept the petition before they can hear arguments in the case.
“States have long adopted careful laws to regulate gambling, including to prevent compulsive gambling, gambling by minors, and insider trading on sports games,” Davenport said in a statement. “We’re calling on the Supreme Court to resolve this issue and recognize that Congress did not silently make the sports-betting industry immune from state law.”
Kalshi said it disagreed with New Jersey’s appeal. In an emailed statement, a spokesperson said: “Kalshi is an open, nationwide financial exchange. It cannot be regulated by 50 different regulators.”
The case is part of a wider series of legal battles involving the Commodity Futures Trading Commission (CFTC), the federal agency responsible for overseeing derivatives markets under the Commodity Exchange Act, and state authorities.
Over the past year, state officials have become increasingly concerned about prediction markets, particularly platforms that offer contracts linked to sporting events. Their position is that such products can effectively amount to gambling and should therefore be subject to state gaming laws.
The CFTC has taken the opposite view, arguing that it has “exclusive jurisdiction” over the markets. Under CFTC Chair Michael Selig, the agency has sued several states and proposed its own framework for regulating prediction markets.
Kalshi suffered a setback last week when an appeals court upheld a lower court’s conclusion that the company had not shown the CFTC’s authority pre-empted Nevada’s power to regulate sports betting.
The CFTC did not immediately respond to a request for comment.
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