New Jersey Petitions Supreme Court Over Prediction Markets

New Jersey is taking its ongoing war with Kalshi straight to the top in a bid to resolve the ultimate question: are prediction markets on sports derivatives or betting?

The Garden State found itself on the wrong end of a Ninth Circuit defeat earlier this year. It said that sports event contracts, such as predictions on the Super Bowl, amounted to “swaps”. However, a recent Ninth Circuit ruling in Nevada concluded the opposite.

If the U.S. Supreme Court rules in favor of New Jersey, it could lead to state regulation – and taxation – of prediction markets. That’s an outcome that Kalshi and its regulatory bosses at the CFTC will resist.

What is the Petition for Writ of Certiorari?

New Jersey attorney general Jennifer Davenport filed a petition for writ of certiorari with the U.S. Supreme Court. Essentially, it asked one question: Can prediction markets offer sports wagers without following state sports-gambling laws?

It’s the first of its kind to be submitted to the Supreme Court. Specifically, it addresses whether prediction markets on sports are legal. That the markets are protected and regulated by a federal body (the CFTC) isn’t factored in. However, that argument is set to ignite.

Davenport said that companies like Kalshi “claim to offer legal sports betting in all 50 states” but they “refuse to follow state laws”.

She added that dozens of states have, or are in the process of, challenging the prediction markets.

“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,” she concluded.

Kalshi Won the Battle: Who Wins the War?

Though Kalshi and Polymarket started out as predominantly financial and political prediction markets, they have seen volume on sports multiply. 2026 has been one of the biggest years yet for trading “event contracts” on the Super Bowl winner, the World Cup Golden Boot, or the US Open champion.

Increasingly, prediction markets are adding markets that resemble those found at online sportsbooks. Polymarket recently added “combo bets” that look and play just like parlays.

States that have regulated sports betting markets – and who have benefited massively from them through taxes – object.

Kalshi won in New Jersey in the spring as it won the argument that it operates under the Commodity Exchange Act. Rather than take “bets”, customers set the price and trade “swaps” on the outcome of elections, reality TV competitions, or sports events.

Regulated Sportsbooks ‘Prohibited from Offering Swaps’

Kalshi predictably traded a ‘No’ share on its support of New Jersey’s petition. It was reported as saying it could not be regulated by “50 different regulators”. However, that argument hasn’t stopped sports betting operators like DraftKings and BetMGM operating in multiple jurisdictions.

The NJDGE is also crying foul over the Dodd-Frank Wall Street Reform and Consumer Protection Act which bans the offering of “swaps” in markets not regulated by the CFTC. That would restrict sportsbooks in New Jersey, Connecticut, or Michigan from offering Kalshi-like prediction markets under existing state rules.

New Jersey can look to Nevada, however, which secured a 3–0 Ninth Circuit win on whether prediction markets can offer sports contracts in the state.

Supreme Court Decision on Prediction Markets May be Slow

With multiple states fighting the CFTC in court, the Supreme Court will undoubtedly end up making a final ruling.

The process could be slow, although some commentators predict a decision by June next year.

There’s another factor to consider: the White House administration has skin in the game. Donald Trump Jr. made an investment in Polymarket through his venture capital company and serves as an adviser to the company. If a Trump-friendly Supreme Court rules on prediction markets, which side will it go with in the ultimate vote?