New Jersey questions the authority over prediction markets regulation, following conflicting decisions by federal appeals courts on sports event contracts. The petition challenges the 3rd U.S. Circuit Court of Appeals ruling on event contracts as derivatives regulated by the CFTC. On the other hand, the 9th U.S. Circuit Court of Appeals rejected requests by Kalshi and Crypto.com for injunctive relief against the Nevada Gaming Control Board, stating that “Kalshi’s sports event contracts have the hallmarks of sports betting.”

The disagreement among courts suggests a need for Supreme Court clarification on prediction market oversight. New Jersey Attorney General Jennifer Davenport stated, “We’re calling on the Supreme Court to resolve this issue and recognize that Congress did not make the sports-betting industry immune from state law.”

New Jersey’s petition argues that companies claiming “state sports-gambling laws all fall away” are incorrect. The petition asserts that the Third Circuit’s decision is “profoundly wrong.” Kalshi remains confident in the lower courts’ rulings, asserting that the CFTC’s exclusive jurisdiction preempts state law.

A bipartisan coalition of 44 state attorneys general supports the view that sports-related event contracts amount to sports betting and should be subject to state regulation. Bank of America suggests the Supreme Court may delay the case until next year due to pending cases in other federal circuits. The outcome of the dispute could impact consumer protections, state tax revenue, and the regulatory future of prediction markets, which handle billions in weekly trading volume.