Kalshi Faces Supreme Court Fight as CFTC Rewrites Rules

Kalshi faces a US Supreme Court dispute over whether states can regulate its sports betting contracts. New Jersey argues the contracts are sports bets subject to state gambling laws, while Kalshi says they are federally regulated event-based derivatives under the Commodity Futures Trading Commission (CFTC). The US Third Circuit previously blocked New Jersey’s enforcement action, but the Ninth Circuit later reached the opposite conclusion in a Nevada case. New Jersey says the circuit split affects at least 20 states and could determine whether prediction markets need state licences, age limits, geolocation checks and responsible-gambling controls. New Jersey filed its Supreme Court petition on 2 September. Kalshi’s response is due within 30 days, followed by a possible 10-day reply from the state. The Supreme Court has not decided whether to hear the case. The dispute could also be affected by a CFTC proposal to replace its broad ban on gaming contracts with case-by-case public-interest reviews. Sports contracts would remain gaming products, although some event-outcome and special-bet contracts could still be allowed. Kalshi says the Ninth Circuit relied partly on rules the CFTC may rewrite within weeks or months. The outcome could shape the US regulatory model for Kalshi and other prediction markets, but it does not directly decide the legality of political, economic or crypto markets.