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Source/Full Story - GamingAmerica'
The state of New Jersey patiently waited in its legal battle against prediction market platform Kalshi. What they’ve been waiting for finally arrived.
New Jersey filed its petition for a writ of certiorari with the Supreme Court on September 2. It’s asking the justices to decide once
and for all whether states can regulate Kalshi’s sports contracts. For all of the prediction markets versus state attorneys general regulatory battles, this is where it had to go.
Nobody who has followed this case closely should be surprised. New Jersey has been building toward this exact moment
since at least July. It just got the one thing it needed to make the petition land.
The Split New Jersey Was Waiting For
The Third Circuit ruled for Kalshi in April. It found that New Jersey’s gambling laws were preempted by federal commodities law.
That ruling let Kalshi keep operating in the state. On August 28, the Ninth Circuit ruled the opposite. It ruled unanimously that Kalshi’s
sports contracts are ordinary gambling, not federally protected swaps.
Judge Ryan Nelson wrote for a three-judge panel appointed entirely by Donald Trump. He put it plainly: “Congress did not take
a wrecking ball to all sports gambling regulations built up over decades by federal, state, and tribal governments when it amended
the [Commodity Exchange Act].” The panel offered an example to illustrate the distinction. Whether the Super Bowl happens is an
occurrence Kalshi could legitimately contract on. Who wins it is gambling, regardless of what label gets attached to it.
That’s a direct conflict between two circuit courts on the same legal question. It’s exactly the fact pattern the Supreme Court almost never passes up.
Why New Jersey Waited
New Jersey didn’t have to wait. It could have appealed the Third Circuit’s loss the moment it happened. Gaming America
reported back in July that the state requested an extended filing deadline. The stated reason was to see how other pending cases would land first.
New Jersey Solicitor General Jeremy Feigenbaum said at the time that “imminent rulings in related cases could bear on how
the state presents its petition.” The state’s own read on its odds was blunt. New Jersey is better positioned to seek Supreme Court
review with a circuit split than without one. In July, that split didn’t exist yet. New Jersey had lost outright at the Third Circuit.
The closest counterweight was a district court ruling in Michigan.
That carries far less weight than a full appeals panel. The state also had one eye on the Sixth Circuit, which heard consolidated
arguments over Ohio and Tennessee’s Kalshi cases on July 30 but still hasn’t ruled. New Jersey didn’t wait for that decision.
The Ninth Circuit got there first, and it changed the math completely. New Jersey filed five days later.
Moving early carried real risk, and New Jersey played it well. A petition asking the Supreme Court to referee a disagreement
that technically didn’t exist yet would have been a much harder sell. Waiting cost New Jersey nothing but time. It bought the state the
one asset that actually moves the needle with the justices.
Why This Is the Case That Gets Taken
In principle, the Supreme Court doesn’t have to grant certiorari just because two circuits disagree. Federal law can apply differently
depending on where a company operates, at least for a while. In practice, the Court takes circuit splits about as reliably as any other
category of case. Letting the same federal statute mean opposite things in different parts of the country is close to the textbook
definition of what certiorari exists to fix.
New Jersey’s petition goes straight to that. It frames the question simply: did Congress mean to federalize sports wagering nationwide,
or leave it to the states, the same authority states have exercised for decades?
Attorney General Jennifer Davenport’s office put the underlying complaint more bluntly: “Companies like Kalshi claim to offer legal
Sports Betting in all 50 States, but they refuse to follow the gambling laws of any State.” More than 20 states have now filed some form
of legal challenge against Kalshi. The CFTC under Chairman Michael Selig has spent the year actively defending the company against nearly
all of them. New Jersey’s case is positioned to be the vehicle that finally settles which side of that fight federal law is actually on.
It would be a genuine surprise if the Court denied review at this point. New Jersey built its petition around the one condition
that almost guarantees the opposite outcome, and it did that on purpose.
The state of New Jersey patiently waited in its legal battle against prediction market platform Kalshi. What they’ve been waiting for finally arrived.
New Jersey filed its petition for a writ of certiorari with the Supreme Court on September 2. It’s asking the justices to decide once
and for all whether states can regulate Kalshi’s sports contracts. For all of the prediction markets versus state attorneys general regulatory battles, this is where it had to go.
Nobody who has followed this case closely should be surprised. New Jersey has been building toward this exact moment
since at least July. It just got the one thing it needed to make the petition land.
The Split New Jersey Was Waiting For
The Third Circuit ruled for Kalshi in April. It found that New Jersey’s gambling laws were preempted by federal commodities law.
That ruling let Kalshi keep operating in the state. On August 28, the Ninth Circuit ruled the opposite. It ruled unanimously that Kalshi’s
sports contracts are ordinary gambling, not federally protected swaps.
Judge Ryan Nelson wrote for a three-judge panel appointed entirely by Donald Trump. He put it plainly: “Congress did not take
a wrecking ball to all sports gambling regulations built up over decades by federal, state, and tribal governments when it amended
the [Commodity Exchange Act].” The panel offered an example to illustrate the distinction. Whether the Super Bowl happens is an
occurrence Kalshi could legitimately contract on. Who wins it is gambling, regardless of what label gets attached to it.
That’s a direct conflict between two circuit courts on the same legal question. It’s exactly the fact pattern the Supreme Court almost never passes up.
Why New Jersey Waited
New Jersey didn’t have to wait. It could have appealed the Third Circuit’s loss the moment it happened. Gaming America
reported back in July that the state requested an extended filing deadline. The stated reason was to see how other pending cases would land first.
New Jersey Solicitor General Jeremy Feigenbaum said at the time that “imminent rulings in related cases could bear on how
the state presents its petition.” The state’s own read on its odds was blunt. New Jersey is better positioned to seek Supreme Court
review with a circuit split than without one. In July, that split didn’t exist yet. New Jersey had lost outright at the Third Circuit.
The closest counterweight was a district court ruling in Michigan.
That carries far less weight than a full appeals panel. The state also had one eye on the Sixth Circuit, which heard consolidated
arguments over Ohio and Tennessee’s Kalshi cases on July 30 but still hasn’t ruled. New Jersey didn’t wait for that decision.
The Ninth Circuit got there first, and it changed the math completely. New Jersey filed five days later.
Moving early carried real risk, and New Jersey played it well. A petition asking the Supreme Court to referee a disagreement
that technically didn’t exist yet would have been a much harder sell. Waiting cost New Jersey nothing but time. It bought the state the
one asset that actually moves the needle with the justices.
Why This Is the Case That Gets Taken
In principle, the Supreme Court doesn’t have to grant certiorari just because two circuits disagree. Federal law can apply differently
depending on where a company operates, at least for a while. In practice, the Court takes circuit splits about as reliably as any other
category of case. Letting the same federal statute mean opposite things in different parts of the country is close to the textbook
definition of what certiorari exists to fix.
New Jersey’s petition goes straight to that. It frames the question simply: did Congress mean to federalize sports wagering nationwide,
or leave it to the states, the same authority states have exercised for decades?
Attorney General Jennifer Davenport’s office put the underlying complaint more bluntly: “Companies like Kalshi claim to offer legal
Sports Betting in all 50 States, but they refuse to follow the gambling laws of any State.” More than 20 states have now filed some form
of legal challenge against Kalshi. The CFTC under Chairman Michael Selig has spent the year actively defending the company against nearly
all of them. New Jersey’s case is positioned to be the vehicle that finally settles which side of that fight federal law is actually on.
It would be a genuine surprise if the Court denied review at this point. New Jersey built its petition around the one condition
that almost guarantees the opposite outcome, and it did that on purpose.