Justice Samuel Alito has given New Jersey until Aug. 4 to ask the Supreme Court to review a Third Circuit ruling that sided with Kalshi in Flaherty v. KalshiEX. If the state files, the case could become the first prediction-markets dispute the justices agree to hear.
New Jersey had asked for 60 more days, to Sept. 4, saying imminent decisions in related cases could affect its petition and whether a circuit split exists. The application was unopposed, but the shorter deadline left the state with a tight window.
The application also said rulings in the Fourth or Ninth Circuits, and possibly the Massachusetts Supreme Court, could inform whether the justices are looking at a fractured field. New Jersey is also familiar with this kind of fight, having won a 2018 Supreme Court case that opened the door to legal sports betting across the country.
The broader dispute is over who regulates event-contract platforms. New Jersey argues the products are gaming, while Kalshi says they are financial instruments under a single federal framework overseen by the Commodity Futures Trading Commission.
Kalshi is a CFTC-licensed designated contract market that offers event contracts, derivatives tied to future outcomes. The Third Circuit opinion says customers can trade on politics, movie box office numbers and weather, and the Supreme Court application says Kalshi also advertised that users could engage in sports betting on its platform.
After Kalshi began offering sports bets to New Jersey users, the Division of Gaming Enforcement sent a cease-and-desist letter saying the conduct violated the Sports Wagering Act and the state constitution’s ban on certain collegiate wagers. The law the division invoked makes such violations a crime of the fourth degree, punishable by fines of up to $100,000.
Kalshi sued in federal court to block enforcement, and the district court granted a preliminary injunction. On April 6, the Third Circuit affirmed, holding that Kalshi’s sports bets likely count as swaps under the Commodity Exchange Act and that the federal law preempts New Jersey’s sports-wagering rules as applied to sports-related event contracts on designated contract markets.
Judge Roth dissented, arguing that Congress had not occupied the field and that Kalshi could comply with both state and federal law. The Third Circuit opinion traces the Commodity Exchange Act from its 1936 origins through the 1974 creation of the CFTC and the 2010 Dodd-Frank amendments, which added swaps and expanded the commission’s exclusive jurisdiction.
The act also gives the CFTC a special rule for event contracts, including those involving gaming, and the opinion says the agency has not yet acted to review or prohibit sports-related contracts. Elsewhere, the CFTC filed an amicus brief in the Ninth Circuit defending its exclusive jurisdiction over prediction markets, and chairman Michael S. Selig said CFTC-registered exchanges have faced an onslaught of lawsuits.
The dispute is spreading beyond New Jersey. Michigan ended its membership and funding arrangement with the National Council on Problem Gambling, citing the group’s ties to Kalshi, and the SEC is seeking public comment on exchange-traded funds built around prediction contracts.
Reporting says prediction markets have surged into the billions during the 2026 World Cup on Kalshi and Polymarket, and that access remains the central issue for bettors in states where conventional sports wagering is still barred. A Sixth Circuit panel is set to hear merits argument on July 30, a decision New Jersey may want to see before the Aug. 4 deadline.
