coindesk.com
New Jersey escalated the state fight against prediction markets to the U.S. Supreme Court on Tuesday, filing for a writ of certiorari asking the high court to rule on how prediction markets should be governed.
The ruling comes months after the Third Circuit Court of Appeals ruled that the Commodity Exchange Act preempted state gambling laws, giving prediction market provider Kalshi, which brought a suit against New Jersey, a win in the judiciary. Different state and federal courts have taken up prediction market cases over the past two years, and their rulings are beginning to split from each other.
“Whether the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act preempted States from regulating sports bets that occur within their jurisdictions if those bets are offered on markets registered with the Commodity Futures Trading Commission,” asks the question at the top of New Jersey’s petition.
Prediction market providers “have no right to offer their sports bets without following state law,” New Jersey Attorney General Jennifer Davenport said in a statement.
The Third Circuit Court of Appeals ruled this past April that Kalshi’s offerings were subject to the federal Commodity Exchange Act, which in turn preempted the New Jersey’s state gambling laws.
The 2-1 appeals court panel ruling pointed to the CFTC, saying the regulator had not made a determination that Kalshi’s sports-related products were contrary to the public interest. The dissenting judge said that the actual products on Kalshi’s platform were just sports bets.
However, just last week, the Ninth Circuit Court of Appeals — a jurisdiction which includes states like Nevada — ruled that the CEA “likely does not preempt” the state’s regulations for sports contracts, teeing up a circuit court split.
After the ruling, CFTC spokesman Zach Fulton told CoinDesk in an email that the ruling “call[ed] out for resolution by the Supreme Court.”
New Jersey petitioning for writ of certiorari does not necessarily mean the Supreme Court will take up the case. There are dozens of other state and federal court cases examining the same question, and the high court may choose to wait for some of these cases to begin resolving before wading into the matter.