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Will New Jersey Lead Another Charge to SCOTUS, This Time Against Prediction Markets?

By jili tutorial · September 5, 2026

Will New Jersey Lead Another Charge to SCOTUS, This Time Against Prediction Markets?

Just eight years after New Jersey successfully petitioned the U.S. Supreme Court to repeal the Professional and Amateur Sports Protection Act (PASPA)—a move that opened the floodgates for sports betting expansion nationwide—the Garden State is again turning to the high court. This time, it seeks to defend its sports betting jurisdiction against the growing influence of prediction markets and sports event contracts.

New Jersey’s Petition Seeks Supreme Court Review

On Wednesday, New Jersey Attorney General Jennifer Davenport announced that her office had filed a petition for a writ of certiorari, following an appeals court ruling earlier this year that favored prediction markets. That 2-1 verdict from the Third Circuit Court of Appeals came down in April, and New Jersey had until Thursday to petition the Supreme Court.

The petition poses a critical question: Did the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010—enacted after the Great Recession—“preempt states from regulating sports bets that occur within their jurisdictions if those bets are offered on markets registered with the Commodity Futures Trading Commission (CFTC)?”

The Core Dispute: State Law vs. Federal Oversight

Prediction markets argue that their event contracts are financial derivatives regulated by the CFTC, while many states contend they are simply sports bets by another name. This jurisdictional clash is at the heart of the case.

There is no guarantee the Supreme Court will hear the case, but a separate appeals court ruling from August 28 strengthens New Jersey’s chances. In that case, a three-judge panel from the Ninth Circuit ruled unanimously in favor of Nevada, creating a circuit court split—a hallmark of many Supreme Court cases.

“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,” Davenport said in a statement.

Why Supreme Court Review Matters to New Jersey

New Jersey stakeholders know the importance of a Supreme Court review. The state lost every case leading up to the PASPA repeal—except for the one that mattered most. The same pattern could play out here, as Kalshi has prevailed so far in state court and the Third Circuit.

Davenport’s petition cites the landmark PASPA ruling in its introduction. “Just eight years ago, this court reiterated that ‘each state is free to act on its own’ in regulating sports betting,” the petition states. “But Kalshi has a different view. Kalshi bills itself as ‘the first app for legal sports betting in all 50 states’ and believes it can offer that legal sports betting without following the sports-gambling laws of any of those 50 states.”

Kalshi’s Defense: A National Financial Exchange

In a statement, Kalshi spokesperson Dani Lever said the platform is “an open, nationwide, financial exchange” that “cannot be regulated by 50 different regulators,” per CDC Gaming. “Both the Third Circuit and the District of New Jersey side with Kalshi, because the CFTC’s exclusive jurisdiction preempts state law,” Lever added. “Nothing in New Jersey’s filing changes that view.”

Each Supreme Court term begins on the first Monday in October and runs through late June or early July. The court typically receives about 7,000 to 8,000 writ petitions and grants about 80—roughly 1 percent—each term. Four of the nine sitting justices must vote to accept a case.

Five current justices—Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito, Elena Kagan, Neil Gorsuch, and Sonia Sotomayor—were on the bench in 2018 for the PASPA case. No SCOTUS-prediction market contracts currently exist on Kalshi, but Polymarket lists a 41 percent probability that the court will accept an event contract case by December 31.

A Two-Year Journey to the High Court

A hearing before the Supreme Court would mark the culmination of what has been the biggest sports betting-related development since PASPA. Perhaps no other issue has united gaming stakeholders from various companies, tribes, states, and regulators.

The Rise of Prediction Markets

Beginning with the U.S. presidential elections in November 2024, when prediction markets catapulted into mainstream culture, their rise has been undeniable. Kalshi and Polymarket have seen their valuations balloon to $40 billion and $21 billion, respectively. The majority of top U.S. bookmakers have scrambled to expand into the prediction space in various forms—building their own exchanges, acquiring existing ones, or engaging in market-making.

Commercial sports betting generated just under $17 billion in nationwide revenue in 2025, which is why Davenport asserts that the “stakes of this case are exceptionally high.” Kalshi and Polymarket alone posted more than $45 billion in trading volume in August—similar but not identical to betting revenue. That figure represented a 15 percent decline from July, a drop attributed to the conclusion of the FIFA World Cup tournament that month, per Yahoo! Finance.

The American Gaming Association (AGA) estimates that the exchanges have siphoned more than $1.3 billion in would-be tax revenue from states. One of the AGA’s primary spokespeople in the fight against prediction markets is former New Jersey Governor Chris Christie, who championed the PASPA case to the Supreme Court.

CFTC Embraces Prediction Markets

As with PASPA, this matter revolves heavily around federalism versus states’ rights. Traditional sports betting is governed by individual state regulators, each with varying laws and regulations. Federal derivatives are regulated by the CFTC, which has fully embraced prediction markets under President Donald Trump after rejecting them in previous administrations.

The web of lawsuits and court rulings involving prediction markets has greatly complicated the issue of jurisdiction. Kalshi has been forced to limit trading in multiple states, most notably Nevada, and the CFTC has gone to unprecedented lengths to protect its licensees—including suing nine states directly and issuing emergency orders to reject state mandates.

Chairman Selig Defends CFTC Oversight

CFTC Chairman Michael Selig is currently the lone sitting commissioner for an agency that traditionally features a bipartisan group of five. Selig has repeatedly defended both the legitimacy of prediction markets as financial assets and the role of the CFTC in overseeing them. Under his direction, the CFTC has embarked on a series of rule proposals regarding prediction markets. However, detractors argue that the proposed changes still allow for sports contracts and, in some ways, could be seen as tightening the belt to make a Supreme Court review look more favorable.

“It’s not a question of whether innovations like blockchain, artificial intelligence, and prediction markets will transform our markets. It’s a question of where this innovation will take place and who will write the rules,” Selig said during a meeting of the CFTC’s Innovation Advisory Committee on August 20, which featured the CEOs of Kalshi, Polymarket, DraftKings, CME Group, and others.

Jess Marquez has covered the global gaming industry since 2022. A native of Reno, Nevada, he’d like to note it’s Ne-va-da, not Ne-VAH-da.