New Jersey asks Supreme Court to rule on prediction markets

New Jersey asked the Supreme Court to take up prediction markets. On Tuesday the state filed a petition for a writ of certiorari, CoinDesk reported, after the Third Circuit held that the Commodity Exchange Act preempted state gambling laws and handed Kalshi a 2-1 win in April.

A cert petition asks the Court to hear the case. The justices can deny review or wait.

The question at the top of the petition is whether the 2010 Dodd-Frank Act "preempted States from regulating sports bets that occur within their jurisdictions if those bets are offered on markets registered with the Commodity Futures Trading Commission." Attorney General Jennifer Davenport said providers "have no right to offer their sports bets without following state law."

What most headlines about New Jersey going to the Supreme Court skip is the fresh split that makes the petition timely. Last week the Ninth Circuit, in a Nevada case, said the CEA "likely does not preempt" state rules for sports contracts. That is the opposite of the Third Circuit's April Kalshi ruling, and it is why CFTC spokesman Zach Fulton told CoinDesk the Ninth Circuit decision "call[ed] out for resolution by the Supreme Court."

CNBC reported Kalshi's response. Spokeswoman Dani Lever said the company disagrees with the filing, called Kalshi "an open, nationwide financial exchange" that "cannot be regulated by 50 different regulators," and said both the Third Circuit and the District of New Jersey already sided with Kalshi because "the CFTC's exclusive jurisdiction preempts state law." That dispute is live. Nothing in the petition decides it.

Cert is not automatic. CoinDesk noted dozens of other state and federal cases on the same question, and the Court may wait. A Bank of America note, cited by CNBC, said the Court might even sit until next year while other circuits move.

The jurisdictional fight (federal market statute versus state gaming law) is the same kind of who writes the rulebook question the SEC's transfer-agent overhaul is posing for tokenized securities.