From NPR · · 1 min
Who Rules Kalshi? New Jersey Asks Supreme Court to Decide
A legal battle over whether states or federal regulators control prediction markets has reached the U.S. Supreme Court.
In brief
A legal battle over whether states or federal regulators control prediction markets has reached the U.S. Supreme Court. The Supreme Court may soon decide whether prediction market sites like Kalshi fall under state gambling laws or federal commodities regulation. Originally reported by NPR.
New Jersey petitions the Supreme Court
New Jersey has asked the Supreme Court to intervene in a massive battle over who controls prediction market platforms, which have unleashed billions in online wagering.
Federal versus state regulation
The core disagreement is whether platforms like Kalshi should be overseen by federal commodities regulators or state gambling commissions. Sports betting accounts for over 80% of volume on these sites.
Conflicting federal court rulings
The legal push follows split decisions by federal appeals courts. The Third Circuit ruled that federal regulators hold exclusive authority over Kalshi, while the Ninth Circuit later ruled in favor of state control.
States defend traditional powers
New Jersey attorneys argue that federal commodities law was never intended to let prediction markets bypass state gambling regulations and public safety oversight.
“Nothing in the Act gives the CFTC unprecedented authority to become the sole regulator of sports gambling in this country”
Financial exchange or sportsbook
Kalshi maintains that federal investment rules override state laws. Meanwhile, state-regulated sportsbooks like DraftKings view prediction sites as fast-growing rivals dodging state taxes.
“Kalshi is an open, nationwide financial exchange. It cannot be regulated by 50 different regulators”
Timeline for a final ruling
If the Supreme Court agrees to hear New Jersey's petition, oral arguments could take place this fall, leading to a definitive decision by next summer.
The takeaway
The Supreme Court may soon decide whether prediction market sites like Kalshi fall under state gambling laws or federal commodities regulation.
