New Jersey asks Supreme Court to rule on prediction market regulations
New Jersey has become the first U.S. state to ask the Supreme Court to clarify whether states can regulate prediction markets, which are platforms where users bet on the outcome of future events, such as elections or sports.
The state filed a petition on Tuesday, seeking a ruling on whether federal law overrides state gambling laws in cases involving prediction markets registered with the Commodity Futures Trading Commission (CFTC).
The move follows conflicting rulings from federal appeals courts. In April, the Third Circuit Court of Appeals ruled that the federal Commodity Exchange Act preempted New Jersey’s state gambling laws in a case involving prediction market provider Kalshi. However, last week, the Ninth Circuit Court of Appeals ruled that the same federal law likely does not preempt state regulations for sports-related prediction markets.
New Jersey’s legal argument
In its petition, New Jersey asks the Supreme Court to resolve whether the 2010 Dodd-Frank Act, which reformed financial regulations, prevents states from overseeing sports bets offered on CFTC-registered prediction markets.
Attorney General Jennifer Davenport stated that prediction market providers “have no right to offer their sports bets without following state law.”
Conflicting court decisions
The Third Circuit’s April ruling sided with Kalshi, stating that its sports-related products were subject to federal oversight by the CFTC. The court noted that the CFTC had not determined Kalshi’s offerings were against public interest. A dissenting judge argued that the products were simply sports bets.
In contrast, the Ninth Circuit’s recent ruling suggested that state regulations may still apply, creating a split between federal courts.
A CFTC spokesman previously told CoinDesk that the conflicting rulings “call out for resolution by the Supreme Court.”
What happens next
The Supreme Court is not required to take the case. The court may wait for additional lower court rulings before deciding whether to intervene.
