New Jersey is asking the U.S. Supreme Court to decide whether federal law preempts states from regulating the prediction market platform Kalshi.
In a Wednesday petition to the high court, the state asserts Kalshi has found a federal back door into sports betting, allowing the company to avoid licensing rules, taxes and consumer protections set by individual states.
“Companies like Kalshi claim to offer legal sports betting in all 50 States, but they refuse to follow the gambling laws of any State,” Jennifer Davenport, the New Jersey attorney general, said in a news release.
The company has been bombarded with legal challenges from at least 20 states, but has a fierce defender in the Trump administration. The federal Commodity Futures Trading Commission, headed by Trump appointee Michael Selig, has already sued a handful of states seeking to regulate the prediction market sector.
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The issue centers around a dispute over whether Congress, in passing its 2010 Dodd-Frank Wall Street Reform legislation, intended to federalize the multibillion-dollar sports-wagering industry or whether states still hold their traditional regulatory authority over sportsbooks.
“Kalshi is an open, nationwide financial exchange. It cannot be regulated by 50 different regulators,” said Kalshi spokesperson Dani Lever. “We remain confident in the lower courts’ rulings, and nothing in New Jersey’s filing today changes our view.”
The request follows a major 9th Circuit Court of Appeals ruling that went against Kalshi, creating a direct split with a separate 3rd Circuit decision that ruled in favor of the company that New Jersey’s state gambling laws are preempted.
The Supreme Court has not yet decided whether it will grant the petition to hear the case.
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