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- A bipartisan coalition of 40 state attorneys general is formally urging the U.S. Supreme Court to hear New Jersey‘s case against prediction markets, arguing that platforms like Kalshi and Polymarket cannot use federal commodity-trading laws as a “window-dressing” escape hatch to bypass sovereign state gambling regulations.
- The coordinated legal push significantly raises the stakes in the ongoing jurisdictional battle over event-contract platforms. State officials are warning the Supreme Court that lower courts remain deeply splintered on whether these rapidly expanding markets—which increasingly overlap with traditional sports betting and politics—should be governed by state gaming laws or exclusively by federal financial regulators backed by the Trump administration.
A bipartisan coalition of 40 state attorneys general, representing 39 states and Washington, D.C., has urged the U.S. Supreme Court to hear New Jersey’s case over whether states can regulate prediction markets such as Kalshi and Polymarket.
The filing raises the stakes in a fast-moving fight between state gambling regulators and the federal government over who controls event-based trading markets that have expanded into sports, politics and other real-world outcomes. New Jersey is trying to overturn an appellate ruling that found federal commodity-trading law superseded the state’s gambling laws.
States argue prediction markets should not bypass gambling laws
According to the amicus brief, the states want the Supreme Court to resolve what they described as a widening conflict in lower courts. The brief says the question of whether prediction markets are regulated only at the federal level or can also be subject to state gambling laws “has splintered the circuits and lower courts with no resolution on the horizon. Only this Court can provide the much needed answer. It should do so.”
The states also took direct aim at the industry’s legal position, arguing that prediction market operators “claim to have discovered this no-state-law-applies escape hatch buried within a subsection of a section of a federal financial reform bill passed in the wake of the 2008 mortgage crisis.”
In the brief, the attorneys general said, “The prediction markets are wrong. They cannot strip the States of their core sovereign power through relabeling and window-dressing.”
Case could shape oversight for Kalshi, Polymarket and similar platforms
The dispute could have broad implications for platforms including Kalshi and Polymarket, both of which have gained traction by offering markets tied to sports, elections and other events. The core legal question is whether those products should be treated under state sports gambling rules or as federally regulated exchange products.
Politico reported that the Trump administration has broadly supported the expansion of prediction markets. The Commodity Futures Trading Commission, led by Trump appointee Michael Selig, has argued that it should serve as the industry’s sole regulator.
At the same time, courts have not been uniform. Judges in states including Nevada and Washington have ruled against Kalshi, while other cases remain pending.
What comes next
The immediate next step is whether the Supreme Court agrees to hear New Jersey’s petition. If the justices take the case, they could decide whether prediction markets remain primarily under federal oversight or whether states retain authority to apply their own gambling laws.
That decision would matter not only for regulators, but also for operators trying to expand nationally in a market where the rules are still being contested across multiple jurisdictions.
Source: As reported by Ashley Ahn.
