A bipartisan coalition of 39 states and the District of Columbia has urged the U.S. Supreme Court to take up New Jersey's fight to regulate prediction markets, saying lower federal courts are divided over whether state gambling laws or federal commodities law controls sports-event contracts, according to RG and political.org. The amicus brief, led by Ohio Attorney General D. Andrew Wilson, was docketed October 7 in Flaherty v. KalshiEX, LLC, No. 26-299.
The brief opens by telling the Court that "federal and state courts are hopelessly confused and divided over an issue of immense importance: whether the Commodity Exchange Act preempts state sports-gambling laws," RG reported. New Jersey filed the underlying petition September 2, asking the justices to review an April 6 decision by the U.S. Court of Appeals for the Third Circuit, which concluded that federal law likely preempts New Jersey's rules as applied to Kalshi's sports-event contracts traded on its CFTC-registered exchange (RG; Cointelegraph).
Five days before the states' filing, the International Association of Gaming Regulators and the North American Gaming Regulators Association filed their own brief backing New Jersey's petition, according to iGaming Times on October 6. The two regulator associations told the Court that the same Kalshi contract is shielded from state law in New Jersey and subject to it in Ohio, and that only the Court can end that contradiction (iGaming Times; RG).
The contradiction the amici describe is the circuit split. The Third Circuit sided with Kalshi against New Jersey, while the Ninth Circuit sided with Nevada in KalshiEX v. Assad, concluding on August 28 that Kalshi had not established a likelihood that the Commodity Exchange Act preempts Nevada's authority, and more fundamentally that the sports contracts at issue are not swaps under the relevant provisions of the Act (RG). Robinhood Derivatives filed its own cert petition September 10 seeking review of that Ninth Circuit ruling; Nevada's response is due October 14 (RG).
The National Council of Legislators from Gaming States added its voice earlier, filing a supporting brief September 22, reported by Cointelegraph on September 23. The lawmakers' brief argues that a ruling favoring Kalshi would render states powerless to regulate sports betting on prediction markets, causing substantial harm and confusion, and warns that casinos and other heavily regulated operators would restructure their products to seek the same treatment (Cointelegraph). The brief did not address the competing argument that event contracts traded on federally regulated markets fall under the CFTC's exclusive jurisdiction.
New Jersey's own petition put the stakes bluntly: companies like Kalshi claim to offer legal sports betting in all 50 states but follow the gambling laws of none, Attorney General Jennifer Davenport said when the petition was filed, citing enforcement actions in at least 20 states and asking the Court to decide whether compliance with the CFTC shields companies from state law (Cointelegraph). Kalshi's response was originally due October 8, but the Court granted an extension to November 9, and no brief has yet been filed for Kalshi (RG).
The Cabazon Band of Cahuilla Indians filed its own amicus October 7, arguing that Kalshi's contracts are available on its reservation, where sports betting is prohibited, and asking the Court to reverse the Third Circuit ruling, RG reported. The tribe's brief attached declarations from two tribal officials, including one who said he opened the Kalshi app on tribal land on September 22 and took a position on a Minnesota Vikings vs Tampa Bay Buccaneers contract (RG).
The October 1 order list, the first of the 2026-27 term, granted review in three unrelated cases and no prediction-market dispute, so the justices' decision on whether to step in is still weeks away, RG reported October 5. Both the New Jersey and Nevada cases arose from preliminary-injunction proceedings rather than final merits judgments, which could counsel the Court to wait regardless of the split. If it takes the case, it writes the single rule deciding whether state capitals can treat prediction markets as gambling, or none of them can. Either way, the docket keeps growing in only one direction: every brief filed backs New Jersey, and the industry's most important leading indicator is now the briefing queue, not trading volume.