New Jersey asks the Supreme Court who is allowed to regulate a sports bet
The state's attorney general petitions for certiorari five days after the Ninth Circuit split from the Third, asking whether registering a market with the CFTC exempts what it lists from every state's gambling law.
What happened
New Jersey's attorney general, Jennifer Davenport, and Mary Jo Flaherty, interim director of the state's Division of Gaming Enforcement, filed a petition for a writ of certiorari on 2 September in Flaherty and Davenport v. KalshiEX, LLC, docketed as No. 26- with the number not yet assigned. The question presented is 'Whether the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act preempted States from regulating sports bets that occur within their jurisdictions if those bets are offered on markets registered with the Commodity Futures Trading Commission.' The office's release calls it 'the first certiorari petition filed with the U.S. Supreme Court regarding the legality of this business model'. The petition runs to 332 pages with its appendix, and the release states two figures the court filings turn on: that in 2025 sports betting 'generated $16.89 billion in revenue for States nationwide, not even including sportsbooks in tribal casinos', and that '95% of Kalshi's revenue in 2025 came from sports betting'. Kalshi's response, given to Cointelegraph by its spokesperson Dani Lever, was that 'We remain confident in the lower courts' rulings, and nothing in New Jersey's filing today changes our view.'
Why it matters
The whole US prediction market build rests on the premise that a CFTC registration is the only licence a venue needs, and two federal appeals courts now disagree about it. What is new here is the argument the petition makes about the consequences of Kalshi winning. Because federal law prohibits trading swaps off CFTC-registered markets, New Jersey argues that a ruling in Kalshi's favour would make every sports wager placed away from such a market unlawful, including in Atlantic City, in Las Vegas and on tribal land. That turns the case from a question about whether one venue may operate into a question about whether the existing sports betting industry may. It is an argument the venues have not had to answer, because until now they were the ones asking to be let in.
What is not settled
A petition is not a grant, and nothing about the timetable is fixed: the docket number had not been assigned when this was written and Kalshi has not filed a brief in opposition. Cointelegraph reports that some observers expect the court to prefer the Nevada case out of the Ninth Circuit, which reached the opposite conclusion five days earlier, and the two cases are in different procedural postures. The petition also does not engage the CFTC's own position, which is that a contract structured as a swap remains a swap whatever it references, and the agency is not a party.
Institutions in this story
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New Jersey Office of the Attorney General
Regulator
The petitioner. Its release calls this the first certiorari petition on whether a venue that self-certifies sports contracts with the CFTC may ignore state gambling law, and its Division of Gaming Enforcement supplies the lead named party.
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Kalshi
Exchange
The respondent, which won below in the Third Circuit and lost five days earlier in the Ninth. Its spokesperson says the filing does not change its confidence in the lower courts' rulings.
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Commodity Futures Trading Commission
Regulator
The agency whose registration is the whole question, and not a party to the petition. New Jersey's argument that a Kalshi win would make betting off CFTC-registered markets unlawful cuts against the agency as much as for it.
On the record
New Jersey petitions the Supreme Court over prediction market sports contracts
New Jersey's attorney general and its gaming enforcement director filed a petition for certiorari on 2 September 2026 in Flaherty and Davenport v. KalshiEX, asking whether Dodd-Frank preempted states from regulating sports bets offered on CFTC-registered markets. The office calls it the first such petition, and it follows opposite rulings in the Third and Ninth Circuits.