Justice Samuel Alito gave New Jersey until Aug. 4 to ask the Supreme Court to take up Flaherty v. KalshiEX, a fight over whether Kalshi’s sports-event contracts are regulated by the states or by federal authorities.
If New Jersey files, the case could become the first prediction-markets dispute the justices agree to hear. The state, which won a landmark sports-wagering case at the Supreme Court in 2018, is now pressing a different betting question.
In its April 6 opinion, the Third Circuit sided with Kalshi. The panel held that the company’s sports bets fit the Commodity Exchange Act’s definition of swaps and fall under the Commodity Futures Trading Commission’s exclusive jurisdiction when traded on a designated contract market.
The court also held that the federal law preempts New Jersey’s sports-wagering laws as applied to those contracts. The majority relied on both field preemption and conflict preemption.
Judge Jane R. Roth dissented. She argued that the designated-contract-market subfield was not a comprehensive federal field and that the Act’s savings clauses left room for state regulation.
She also said Kalshi could comply with both New Jersey and federal law, and that the state’s rules would not frustrate Congress’s objectives.
The dispute began in late 2024, when a Kalshi competitor started offering sports event contracts and Kalshi followed a month later. Two months after that, New Jersey sent a cease-and-desist letter and threatened to pursue any measures available under state law if Kalshi did not stop and void existing wagers.
Kalshi sued and sought a preliminary injunction against enforcement of New Jersey’s Sports Wagering Act and the state constitution’s ban on wagers for certain collegiate sporting events. The U.S. District Court in New Jersey granted the injunction, finding a reasonable likelihood that Kalshi would prevail on preemption.
The Third Circuit also described Kalshi as a CFTC-licensed designated contract market that offers event contracts, a derivative tied to multiple possible outcomes and an expiration date. It said the value moves with market perceptions of the event’s likelihood.
The Supreme Court extension request said the normal certiorari deadline would have expired on July 6, and the applicants sought until Sept. 4 to file. Alito’s order set a shorter deadline of Aug. 4.
The broader backdrop is a business that the CFTC says is expanding quickly. In a Federal Register proposal, the agency said trading volume across CFTC-registered prediction markets exceeded $25 billion in 2025, while the wider futures market it regulates had a notional value of about $31 trillion.
That same proposal would amend the CFTC’s rules for event-contract derivatives on prediction markets, including clarifying which contracts may be deemed contrary to the public interest and kept off CFTC-registered platforms. Comments are due by July 27.
