New Jersey Attorney General Jennifer Davenport has filed an inaugural petition with the US Supreme Court to determine whether prediction markets can legally offer sports-related event contract trading without following state gaming regulations.
In April, a Third Circuit Court in Philadelphia ruled in favor of Kalshi by declaring the Commodity Futures Trading Commission (CFTC) maintained exclusive jurisdiction over sports event contracts and preempted New Jersey’s gaming laws.
Since the decision was handed down, though, a Ninth Circuit Court in San Francisco voted unanimously to forbid Kalshi from filing enforcement action against Nevada regulators, having determined that the Commodity Exchange Act (CEA) is unlikely to preempt regulations enforced by the Nevada Gaming Commission.
“Companies like Kalshi claim to offer legal sports betting in all 50 states, but they refuse to follow the gambling laws of any State. These companies have no right to offer their sports bets without following state law, which is why dozens of states across the ideological spectrum have opposed them,” Davenport said.
“States have long adopted careful laws to regulate gambling, including to prevent compulsive gambling, gambling by minors and insider trading on sports games. 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.”
Davenport requested the Supreme Court overrule the Third Circuit Court’s decision, marking the first-ever petition to be filed regarding the legality of Kalshi’s business model.
New Jersey Division of Gaming Enforcement (DGE) Interim Director Mary Jo Flaherty also spoke on the request, having said, “Kalshi markets itself as the ‘first app for legal sports betting in all 50 states,’ including for wagering on NCAA games held in New Jersey and participated in by New Jersey teams, which is impermissible under New Jersey’s Constitution. But Kalshi does not abide in any way with our state’s gaming laws.
“This is a states’ rights issue. In New Jersey, gaming is prohibited by its Constitution, other than for exceptions approved by New Jersey voters. In this case, the state is upholding the will of New Jerseyans regarding the manner in which gaming can be conducted.”
New Jersey also became the first US state to reference the Ninth Circuit Court decision, while Michigan Attorney General Dan Nessel managed to secure a second preliminary injunction against Kalshi on September 2.
Kalshi formed a new partnership with The Weather Company on August 28 to verify outcomes on related markets and integrate real-time data within The Weather Channel application and website
