New Jersey just escalated its legal battle against prediction market operator Kalshi to the highest court in the land. The state filed a petition for writ of certiorari on September 2, asking the US Supreme Court to review a Third Circuit ruling that effectively stripped New Jersey of its ability to enforce state gambling laws against the digital marketplace.
The case, Flaherty v. KalshiEX, LLC, sits at the intersection of federalism, financial regulation, and the rapidly growing prediction markets industry.
How we got here
The fight started in 2025 when New Jersey’s Division of Gaming Enforcement accused Kalshi of running unauthorized sports wagering operations in the state. The division issued cease-and-desist orders, arguing that Kalshi’s sports event contracts were functionally indistinguishable from sports bets, which New Jersey regulates under its own gambling laws.
Kalshi saw things differently. The company, which operates as a CFTC-designated contract market, argued that its products are “swaps” governed by the Commodity Exchange Act and its Dodd-Frank amendments. In plain terms: Kalshi claimed its contracts are financial instruments under federal oversight, not sports bets under state jurisdiction.
