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New Jersey wants the Supreme Court involved. Attorney General Jennifer Davenport filed a petition asking the nation’s highest court to step in and settle a growing legal mess around Kalshi’s sports event contracts — and the timing couldn’t be messier.
The trigger was a Ninth Circuit ruling handed down August 28. That court ruled unanimously that Kalshi’s contracts don’t fit the statutory scheme under federal law and could raise problems under the major-questions doctrine. The problem? That ruling directly contradicts what the Third Circuit said back in April. The Third Circuit had ruled that the Commodity Exchange Act — the CEA — likely preempts state gambling laws for contracts traded on a CFTC-licensed exchange. Two federal appeals courts. Two opposite answers. That’s pretty much the definition of a circuit split, and it’s exactly why New Jersey is pushing for Supreme Court review.
Kalshi’s in a tough spot.
A Legal Fight Spreading Across Six Circuits
It’s not just New Jersey and Nevada driving this. The Fourth Circuit is sitting on an appeal from Maryland. The Sixth Circuit heard arguments from both Ohio and Tennessee back in July. Kalshi is also appealing a New York district court decision — that one’s heading to the Second Circuit. And the Massachusetts Supreme Judicial Court is deliberating on a separate injunction against Kalshi’s operations there.
That’s a lot of courts. And each one could come back with something different.
The Massachusetts case won’t directly resolve the federal circuit split, but it adds noise to an already complicated picture. Every new ruling either deepens the legal confusion or chips away at it slightly — and right now, the confusion is winning. Kalshi is operating under a patchwork of state restrictions, with some courts blocking its activities and others leaving it open, depending on which circuit’s logic applies locally. Nevada, Michigan, and Washington have court orders against Kalshi. New Jersey, sitting under the Third Circuit’s ruling, is still open.
That inconsistency is basically unworkable long-term.
CFTC Steps In, Kalshi Pushes Back
Kalshi isn’t sitting still. The company intends to challenge the Ninth Circuit ruling, arguing that CFTC regulations don’t prohibit sports contracts. That’s their core position — that federal licensing through the CFTC should be enough to override state-level gambling laws that would otherwise shut them down.
The CFTC seems to agree, at least in part. The agency said it’s concerned about how the Ninth Circuit read the statute and sees real potential for a circuit split that would need Supreme Court resolution. That’s notable. Federal regulators don’t usually flag circuit splits publicly unless they think the issue is serious enough to warrant top-court attention.
And the CFTC has already shown it’s willing to act fast when Kalshi’s operations are threatened. In August, the agency used emergency authority under the Commodity Exchange Act to keep Kalshi’s exchange running after New York tried to shut it down over a separate legal dispute — one tied to a $36 billion lawsuit. The CFTC moved to protect a federally licensed exchange from state-level interference. That’s a strong signal about where the agency stands on the broader preemption question.
No details yet on exactly how the CFTC plans to engage with the Supreme Court petition, if at all.
What Happens Next Is Anyone’s Guess
The Supreme Court hasn’t decided whether to take the case. Kalshi has 30 days to respond to New Jersey’s petition. And the decisions still coming from the Second, Fourth, and Sixth Circuits could shift the picture before the justices even vote on whether to grant review.
If those circuits split further, the case for Supreme Court intervention gets harder to ignore. If some of them line up with the Third Circuit’s reasoning, the conflict looks less urgent — and the Court might pass. Unclear yet which way those rulings will land.
What’s clear is that the stakes are real. Kalshi and platforms like it are in legal limbo, trying to operate nationally under federal licensing while states keep challenging their right to do so. Each pending case adds another variable. The CEA preemption question — whether federal law beats state gambling rules for CFTC-licensed exchanges — doesn’t have a clean answer right now, and it won’t until either the circuits align on their own or the Supreme Court forces the issue.
Kalshi’s 30-day response window to New Jersey’s petition starts now.
Frequently Asked Questions
What did the Ninth Circuit rule about Kalshi on August 28?
The Ninth Circuit ruled unanimously that Kalshi’s sports contracts don’t align with the statutory scheme under federal law and could raise issues under the major-questions doctrine, contradicting the Third Circuit’s earlier April ruling.
What role did the CFTC play in Kalshi’s New York dispute?
The CFTC used emergency authority under the Commodity Exchange Act to keep Kalshi’s exchange operational after New York attempted to shut it down in connection with a separate $36 billion lawsuit.
Why It Matters
This Supreme Court petition underscores the increasing scrutiny of the regulatory landscape surrounding prediction markets, particularly in the context of sports betting. As states like New Jersey push for clarity, the outcome could set critical precedents that influence how both federal and state regulations will treat similar contracts in the burgeoning crypto and betting markets. The implications of this legal battle extend beyond Kalshi, potentially affecting the broader framework for innovative financial products that intersect with gambling laws.
