New Jersey Escalates Legal Battle Over Kalshi Sports Betting

The filing, submitted on September 2, follows a Third Circuit decision that favored Kalshi by treating its sports event contracts as swaps under the Commodity Exchange Act. New Jersey contends that Congress never intended for the Dodd-Frank Act to strip states of their traditional authority to police wagering within their own borders. By invoking the major-questions doctrine, the state asserts that such a significant shift in federal-state power requires explicit congressional authorization, which it claims is absent from current law.

This legal friction is intensified by a direct conflict between federal appellate courts. While the Third Circuit granted Kalshi a preliminary injunction against New Jersey regulators, the Ninth Circuit recently allowed Nevada to enforce its own gaming laws against similar prediction market products. This split creates a patchwork of rules across the country, leaving operators facing inconsistent enforcement landscapes. With over 20 lawsuits and cease-and-desist actions active nationwide, the outcome of this petition could fundamentally alter the regulatory future of prediction markets, which currently derive 85% to 90% of their trading volume from sports-related event contracts.