jili tutorial

New Jersey Petitions Supreme Court to Hear Sports Prediction Market Case Following Circuit Split

By jili tutorial · September 4, 2026

New Jersey Petitions Supreme Court to Hear Sports Prediction Market Case Following Circuit Split

New Jersey has formally petitioned the U.S. Supreme Court to decide whether sports prediction markets are exempt from state gambling laws. The state is appealing a May ruling by the Third Circuit Court of Appeals, which sided with Kalshi, a prediction market platform. At the time, New Jersey signaled its intent to seek Supreme Court review. The recent Ninth Circuit ruling, which went against Kalshi, created a split between federal circuits, prompting New Jersey to argue that a definitive Supreme Court decision is now necessary.

Circuit Split Sparks Urgency for Supreme Court Review

In its petition, New Jersey argues that the conflicting rulings mean a Supreme Court judgment “is needed to provide lower courts, states, prediction markets, the CFTC, tribes, and casinos with a definitive answer.” The split between the Third Circuit (favoring Kalshi) and the Ninth Circuit (against Kalshi) highlights the legal uncertainty surrounding the regulation of sports event contracts.

Around 50% Chance SCOTUS Accepts the Case This Year

For the Supreme Court to hear the case, at least four of the nine justices must vote to grant certiorari. According to Polymarket, which offers a prediction market on this very question, the chances spiked to 52% after the Ninth Circuit ruling but have since fallen to 46%. However, the Supreme Court accepts fewer than 5% of all petitions—roughly 100 cases per year. Former CFTC regulator Carl Kennedy noted that neither the Third nor Ninth Circuit rulings are final judgments, so the Court may “wait for a more procedurally developed case.”

Kalshi Says Rules Revision Is Coming

In response to New Jersey’s petition, Kalshi spokesperson Dani Lever stated, “We disagree with New Jersey’s filing. Kalshi is an open, nationwide financial exchange. It cannot be regulated by 50 different regulators. Both the Third Circuit and the District of New Jersey sided with Kalshi because the CFTC’s exclusive jurisdiction preempts state law.”

The Third Circuit ruled 2–1 in favor of Kalshi, with the dissenting judge arguing that the platform facilitates gambling and should be subject to state gambling laws. In contrast, the Ninth Circuit ruled unanimously against Kalshi, with all three judges finding that its sports contracts constitute sports betting. That ruling cited CFTC rules, which allow the agency to prohibit contracts related to gaming if it deems them against the public interest. The vague wording of this rule has sparked numerous lawsuits. Kalshi and the CFTC argue that it grants the CFTC authority to regulate sports markets, while states contend that it proves Congress did not intend to allow federal regulation of sports gambling.

New Jersey’s petition asserts: “Nothing in the Act gives the CFTC unprecedented authority to become the sole regulator of sports gambling in this country, much less gives companies a get-out-of-50-state-laws-free pass by self-certifying their bets on a CFTC-registered market.”

Lever added that the Ninth Circuit’s interpretation “is based on a regulation that’s in the process of being rewritten.” Kalshi CEO Tarek Mansour also suggested that changes to CFTC rules could come soon, clarifying that sports contracts are permitted. However, debate continues over whether the CFTC has sufficient authority to rewrite its rules without explicit backing from Congress.

No Consensus on Supreme Court Verdict

How the Supreme Court rules could have major implications for the future of sports betting in the United States, but there is no clear consensus on the outcome.

Circa Sports CEO Derek Stevens told CasinoBeats that too many states oppose prediction markets for the Court to rule in Kalshi’s favor. “I’m of the position that there’s 44 of the 50 states’ Attorneys General in lawsuits with the prediction markets. I think there’s too much money that would be lost. I still believe that a more reasonable outcome will be developed,” he said, pointing to the tax revenue states currently collect from sports betting. “The state of New York will lose over $1.5 billion in tax revenue. The state of Illinois will lose a tremendous amount of tax revenue,” Stevens warned. If the Supreme Court rules in favor of prediction markets, he argued, “you’re going to have a lot of states that are going to have massive holes in their budget.”

Legal experts also hold differing views. Law professor Melinda Roth outlined arguments Kalshi could draw from the Ninth Circuit ruling to support its case. Stephen Piepgrass of Troutman Pepper Locke noted that the Supreme Court has frequently overturned Ninth Circuit decisions in recent years. Gaming lawyer Daniel Wallach, however, said many elements of the Ninth Circuit ruling make the case difficult for Kalshi. The judges unanimously concluded that Kalshi’s sports markets do not meet the definition of swaps under the Commodity Exchange Act (CEA). Wallach also cited the major questions doctrine, which requires federal agencies to have clear and explicit authorization from Congress before altering rules with vast “economic and political significance.”

With Kalshi valued at around $40 billion and states collecting substantial revenue from sports betting, the economic stakes are enormous. New Jersey’s petition states: “The issue is one of tremendous practical and legal consequence: Kalshi seeks to federalize the multi-billion-dollar sports betting industry at the expense of every state sports gaming law.” This creates what some see as an ironic situation: Kalshi argues that prediction markets allow companies facing potential economic impact to hedge their bets, yet the platform has not joined Polymarket in creating markets on this very topic.