Supreme Court urged to let states regulate sports bets on prediction markets

Key Points:

• New Jersey has petitioned the Supreme Court to decide whether states can regulate sports betting on prediction markets like Kalshi, challenging a 3rd Circuit ruling that such bets are "swaps" under federal jurisdiction of the Commodity Futures Trading Commission (CFTC).
• The case highlights a circuit split, as the 9th Circuit recently ruled Nevada can block Kalshi’s sports bets, viewing them as gambling rather than swaps, raising the likelihood that the Supreme Court will intervene.
• New Jersey argues that allowing Kalshi to operate under federal CFTC registration without state oversight would undermine state sports gambling laws and disrupt regulation of a multibillion-dollar industry.
• The legal debate centers on whether sports bets qualify as "swaps" under the Dodd-Frank Act, with courts divided on whether athletic events have the financial or commercial consequences required to meet that definition.
• New Jersey contends that even if sports bets are swaps, CFTC jurisdiction does not preempt state police powers over gambling, and that federal law did not intend to federalize sports betting regulation, warning that Kalshi’s position would imply longstanding state-licensed sportsbooks are violating federal law.