New Jersey is asking the Supreme Court to decide who calls the shots on prediction markets - state regulators or the federal government. In its filing, the state asks the justices to take up a case decided in April by the 3rd U.S. Circuit Court of Appeals, which classified every event contract as a derivative subject to the Commodity Futures Trading Commission's oversight. The filing also argues that the disagreement among appeals courts "justifies certiorari," meaning the justices should take the case.
Attorney General Jennifer Davenport said, "We're calling on the Supreme Court to resolve this issue and recognize that Congress did not silently make the sports-betting industry immune from state law." The petition adds, "So long as a company offers its sports bets on a CFTC registered market, they claim, state sports-gambling laws all fall away," and concludes, "The Third Circuit's profoundly important decision is also profoundly wrong."
Kalshi reiterated to CNBC that its platform is a financial exchange. Spokeswoman Dani Lever said, "We disagree with New Jersey's filing."
This is the latest turn in a broader fight over who oversees prediction markets, with the CFTC on one side and dozens of states on the other.
On Friday, the 9th U.S. Circuit Court of Appeals concluded that sports-related event contracts do not qualify as swaps overseen by the CFTC, and it turned down an injunction requested by Kalshi and Crypto.com against the Nevada Gaming Control Board. That outcome conflicts with the 3rd Circuit's April decision and, according to a Monday note from Bank of America, creates a clear opening for the Supreme Court to weigh in. "Based on our conversations with legal experts, we think it is still possible the Supreme Court waits until next year before hearing the case as there are still pending cases in other federal circuits," the note said.
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Traders moved quickly: DraftKings and FanDuel parent Flutter Entertainment gained more than 5% following New Jersey's petition filing. With two federal appeals courts now at odds, a Supreme Court review is squarely on the table, but Bank of America says a hearing might not come until next year. Translation for your money: expect headlines and volatility to ebb and flow as the timeline plays out.