New Jersey Asks Supreme Court to Rule on Prediction Markets
Left 67%
Center 0%
Right 33%
2 left · 0 center · 1 right
What happened
New Jersey Attorney General Jennifer Davenport petitioned the U.S. Supreme Court to review an April ruling by the 3rd U.S. Circuit Court of Appeals holding that event contracts on prediction markets—platforms such as Kalshi on which users trade on outcomes including sports—are derivatives under exclusive Commodity Futures Trading Commission (CFTC) regulation and thus preempt state sports-gambling laws. On August 28, the 9th U.S. Circuit Court of Appeals ruled that sports-related event contracts are not CFTC-regulated swaps and rejected Kalshi’s request to block Nevada Gaming Control Board oversight. Kalshi, a CFTC-registered designated contract market, says it is a nationwide financial exchange that cannot be regulated by 50 different state regulators. Multiple other states have sued or sought to restrict the platforms on the same question. Shares of DraftKings and Flutter Entertainment, parent of FanDuel, rose more than 5 percent after the filing.
Omitted — what each side leaves out
Unpacked
Left-leaning coverage never reports the sports-and-youth volume that right-leaning coverage treats as the heart of the fight, so the Supreme Court petition reads as a who-regulates-whom fight rather than a clash over sportsbooks open to 18-year-olds. The New York Post reports that sports bets and parlays account for 80% of Kalshi's overall volume. It also says young adults under typical state gambling ages have traded $5.4 billion on the platform this year, a figure CNBC does not carry.
Right-leaning coverage frames New Jersey's attorney general as trying to close the platforms. Left-leaning coverage does not. The New York Post says she "wants to shut down" sites like Kalshi, while CNBC describes only a request for the justices to review oversight.
If the states won, which statute would set the minimum age to trade a sports event contract?
Bottom line
A CNBC reader of New Jersey's Supreme Court petition never sees the $5.4 billion that 18-to-21-year-olds have already traded on Kalshi, so the case looks like a turf war over derivatives instead of a fight over who polices youth sports betting.
The receipts — 6 facts one side's coverage lacks
- Sports bets combined with parlays account for 80% of Kalshi's overall volume
- President Trump said it is critically important that the CFTC's exclusive authority over prediction markets is maintained
- 44 state attorneys general assert that these contracts amount to sports betting
- A federal court in July temporarily blocked a Minnesota ban on prediction markets
- CFTC chairman Mike Selig dismissed a request from the NCAA, NFL, NBA, PGA Tour and other sports leagues to raise the minimum trading age to 21
- Kalshi said the Ninth Circuit differed based on a regulation that is in the process of being rewritten
The Left View
CNBC and ABC News frame the petition as a federalism fight over whether states still police sports betting. Davenport said New Jersey is calling on the Court to “recognize that Congress did not silently make the sports-betting industry immune from state law,” that the circuit divide has “tremendous importance,” and that it “will determine whether a multi-billion-dollar gaming industry can suddenly operate free from state sports-gaming laws,” adding that the state has regulated sports wagers for more than 100 years. The petition calls the Third Circuit decision “profoundly wrong” and says the split “justifies certiorari.” The outlets report that 44 state attorneys general assert the contracts amount to sports betting, that officials in both Republican- and Democrat-controlled states have moved to regulate or ban the platforms, and that Kalshi replies it is a financial exchange whose CFTC jurisdiction preempts state law.
The Right View
The New York Post presents the filing as a move by Davenport, whom it describes as wanting to shut down sites like Kalshi and Polymarket. It reports that attorneys general from both parties, Native tribes, and the casino industry want casino and sportsbook rules applied, and that critics argue the platforms operate as unlicensed sportsbooks, skirting state laws and taxes and letting 18-to-20-year-olds onto markets closed to other sports betting. It cites figures that 18-to-21-year-olds have traded $5.4 billion on Kalshi this year, including about $3.9 billion in sports and parlays, and that sports bets and parlays make up 80 percent of Kalshi’s volume. The Post also highlights President Trump’s statement that “It is critically important that the CFTC’s exclusive authority over Prediction Markets is maintained,” CFTC Chairman Mike Selig’s dismissal of sports leagues’ request to raise the trading age to 21, and Donald Trump Jr.’s role as an investor and adviser to Polymarket and an adviser to Kalshi.
Our Take (balanced)
New Jersey’s strongest argument is that states have long regulated gambling, including sports betting, and that Congress did not clearly withdraw that power for contracts that, in the Ninth Circuit’s words, have “the hallmarks of sports betting”—with Davenport’s warning that a multi-billion-dollar industry could otherwise run free of state gaming laws as the practical stake. Kalshi’s strongest argument is that CFTC exclusive jurisdiction over swaps on a registered designated contract market, already accepted by the Third Circuit and the District of New Jersey, cannot function if a single nationwide exchange answers to 50 gambling regimes. The unresolved tension is whether sports event contracts on a CFTC-registered market are federally preempted derivatives or state-regulated wagers.
3 sources
More stories
The week's bottom lines, in your inbox
One email a week: the five stories that mattered and what they actually mean. Free.