New Jersey has petitioned the US Supreme Court to allow states to classify prediction markets like Kalshi and Polymarket as gambling. The fight has been going on for two years now, and it’s getting to the Justices of the Supreme Court for the first time. The petition came in on Wednesday, and a ruling by the apex court would settle the dispute as to whether this billion-dollar industry will be regulated by state gaming regulators or by a single federal agency. Davenport wants Congress read narrowly, not the CFTC The petitioners ask the justices to overturn a Third Circuit court based in Philadelphia, which ruled that the Commodity Futures Trading Commission (CFTC) has exclusive powers to regulate platforms like Kalshi and Polymarket, overriding the gambling laws of the state of New Jersey. Jennifer Davenport, the State Attorney General, a Democrat, says the case is simply about stopping federal overreach. “We’re calling on the Supreme Court to resolve this issue and recognize that Congress did not silently make the sports-betting industry immune from state law,” she said in a statement. In the filing, her office makes the argument that the Commodity Exchange Act did not empower the CFTC to act as “the sole regulator of sports gambling in this country,” adding that matters pertaining to health and safety have always rested within the jurisdiction of the states. A circuit split the justices may not be able to overlook New Jersey has timed this suit to perfection. Its petition comes barely a week after the Ninth Circuit’s 3-0 ruling, allowing states to regulate prediction markets as sports betting, siding with Nevada. The opinion of the Ninth Circuit is at odds with that of the Third Circuit, which held that Kalshi’s “event contracts” are legally different from sportsbooks and should be under federal oversight.The crux of the matter has now divided the two appeals courts, and legal experts believe the split is enough reason for the apex court to step in. The justices are likely to reach a decision this fall as to whether or not they will hear the case, and if they do, a ruling is expected next summer.Kalshi happens to be the most popular prediction site in the country and is also named in New Jersey’s petition. The company says it expects to win the case. “Kalshi is an open, nationwide financial exchange. It cannot be regulated by 50 different regulators,” spokeswoman Dani Lever said.Casinos, tribes and 44 states join forces against the platformsThe opposition is across the spectrum, covering both political parties. A coalition of 44 states has referred to the prediction sites as unlicensed sportsbooks that evade consumer-protection rules and tax obligations that traditional betting carries.Native American tribes and the OGs of the gaming industry have joined forces with the states. Operators like FanDuel and DraftKings consider the prediction sites as competitors cutting corners.At the moment, three states, Nevada, Michigan, and Washington, have secured court orders pausing Kalshi’s sports contracts. Sports wagers are the blood of the business and account for over 80% of weekly volume.Why the stakes keep increasingThe money at stake has increased in time involved has grown fast. Cryptopolitan reported that total prediction-market volume jumped to $38.5 billion from $2 billion in August 2025, a 1,900% increase. Kalshi allows crypto deposits and withdrawals, and Polymarket focuses on on-chain stablecoin guarantees, so a state-by-state shutdown would affect the crypto markets.The CFTC Chairman Mike Selig, a Trump appointee, says his agency has exclusive jurisdiction over prediction markets and has pushed for them to grow. That sets a clash between the federal government and dozens of states.The smartest crypto minds already read our newsletter. Want in? Join them.