New Jersey asked the Supreme Court on Wednesday to wade into the hotly contested legal battle between state and federal regulators over prediction markets in what could be a landmark decision for the fledgling industry.
New Jersey Attorney General Jennifer Davenport filed a petition asking the court to review a recent split in federal appeals court decisions.
At issue is whether Kalshi's sports event contracts -- which allow users to stake money on the yes/no outcome of sporting events -- are sports bets governed by state gaming laws or swaps, a financial instrument regulated by the Commodity Futures Trading Commission, a federal agency.
Kalshi and the CFTC are engaged in legal battles across the country with state regulators over the question. In April, the 3rd Circuit Court of Appeals ruled against New Jersey in a 2-1 decision that barred the state from taking enforcement actions against the company. Last week, in a separate case in Nevada, the 9th Circuit unanimously ruled against Kalshi and said sports event contracts fell under state law.
"Kalshi's model, which offers sports bets in all 50 states, would upend the promise that each state could decide whether to allow sports wagering within its borders," Davenport said in a statement.
"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."
Kalshi spokesperson Dani Lever said in a statement that the company disagreed with the state's position.
"Kalshi is an open, nationwide financial exchange. It cannot be regulated by 50 different regulators," Lever said. "We remain confident in the lower courts' rulings, and nothing in New Jersey's filing today changes our view."
The CFTC did not immediately respond to ESPN's request for comment.
Kalshi, which counts Donald Trump Jr. as an adviser, has seen rapid growth in recent years and has raked in billions through its sports offerings even as it has faced lawsuits from state regulators and from tribes. Sports accounted for 95% of Kalshi's revenue last year, according to New Jersey's filing.
In its petition, the New Jersey AG's office urged the Supreme Court to take action because of the financial interests at stake.
"Not only is this an issue of great policy importance, but the practical economic impacts are overwhelming," the filing read. "Whether states or Kalshi are correct about this legal issue will decide who oversees a multi-billion-dollar industry."
New Jersey's petition comes eight years after the Supreme Court ruled in favor of the state in a landmark ruling that opened the door to the widespread legalization of sports betting.
