- New Jersey filed its Kalshi Supreme Court petition Sept. 2, one day ahead of a twice-extended deadline.
- The Supreme Court docketed the case Sept. 8 as No. 26-299, with Kalshi’s response due Oct. 8.
- New Jersey warns that Kalshi’s legal theory would put state-licensed sportsbooks in violation of federal swaps law too.
- New Jersey counts at least 39 lawsuits across 20 states, with lower courts splitting 18-4 against Kalshi’s position.
WASHINGTON – New Jersey filed its Kalshi Supreme Court petition Sept. 2, one day ahead of a twice-extended deadline, and it asks the justices one thing, whether Congress, in the 2010 Dodd-Frank Act, took away the states’ power to police sports bets sold on a federally registered prediction market.
Petition Docketed As Case No. 26-299
New Jersey Attorney General Jennifer Davenport’s office asked the justices to reverse a Third Circuit ruling that shields KalshiEX, LLC’s sports-event contracts from the state’s Sports Wagering Act, filing under the caption Flaherty v. KalshiEX in New Jersey’s petition for writ of certiorari. The case carries docket No. 26-299, was docketed Sept. 8, and gives Kalshi until Oct. 8 to answer, per the court’s docket for the case.
The petition presents one question, quoted here in full: “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 answer settles which regulator licenses gambling sites for USA players once a wager moves onto a CFTC-registered exchange.
The Argument New Jersey Says Threatens Every State Sportsbook
In its opening pages, New Jersey’s petition raises a consequence for casinos that have nothing to do with Kalshi: Dodd-Frank also bars trading swaps anywhere except on a CFTC-registered market. Should Kalshi’s theory prevail, the “state-licensed sportsbooks that everyone has understood to be legal since Murphy,” casino sportsbooks among them, “have apparently been violating Dodd-Frank all along,” the state argues in its petition.
New Jersey traces the same logic to the Third Circuit dissent. Because trading swaps outside a CFTC-designated contract market is illegal, Judge Jane R. Roth wrote, “any individual who engages in gambling outside of a DCM would commit a felony” if the definition of swaps were taken “to its logical extreme.” The petition reads that passage as a warning for every sportsbook operating under a state license since the Supreme Court’s 2018 Murphy ruling struck down the federal ban on sports betting.
The petition also lists what New Jersey’s own law requires and Kalshi does not follow: a minimum betting age of 21, a self-exclusion list operators must honor, and rules against insider trading.
A Circuit Split New Jersey Calls Irreconcilable
The split the petition asks the court to resolve, the Third Circuit’s 2-1 April ruling for Kalshi and the Ninth Circuit’s 3-0 ruling for Nevada on Aug. 28, was set out when Kalshi’s Supreme Court fight hinged on the Sept. 3 deadline. The petition calls that conflict “direct, acknowledged, and irreconcilable,” the same fight tracked in the guide to New Jersey prediction markets.
By New Jersey’s count, the dispute has spawned at least 39 lawsuits in 20 states. Of the more than 20 rulings those cases have produced, the petition tallies 18 against Kalshi’s preemption theory and four for it, a record the state says no lower court can straighten out on its own.
The justices now hold a filing that asks for a decision “this Term,” and Kalshi has until Oct. 8 to tell them why they should not take the case.