New Jersey faces prediction market cases citing Ninth Circuit ruling

A New Jersey courtroom is about to find out whether one appellate decision travels. The Ninth Circuit's ruling against Kalshi — that sports event contracts are sports betting under state law, not federally protected financial instruments — was handed down in Nevada. By the end of the same week, litigants in other jurisdictions had already dropped it into their own filings.

That is how a circuit split works in practice. It is not an abstraction about judicial geography. It is a named attorney, in a named courthouse, attaching a PDF to a brief and writing: see also. The question is whether judges in states that did not participate in the Nevada litigation feel bound by its logic, or whether they find room to disagree. Some will disagree. That is the point of a split.

The consensus read on what happens next is that this ends at the Supreme Court. I think that is probably right, but the timing assumption embedded in that view is wrong. The cases working their way through New Jersey and other states are not simply waiting rooms for a cert petition. Each one generates its own record, its own fact pattern, and its own possible ruling. A district court in New Jersey that reaches a different conclusion from the Ninth Circuit does not resolve the underlying question — but it sharpens it, and it extends the period during which Kalshi operates under genuine legal uncertainty across multiple states simultaneously.

That uncertainty has a cost that is not evenly distributed. Kalshi signed the US Open as a partner and is preparing for NFL season volume. The commercial bets are placed. The legal exposure is also placed. What changes with each new filing is the map of states where the company has to hold both positions at once — open for business, under challenge — and the managerial attention that requires.

The NFL season is the stress test no one has explicitly modeled. Football betting volume on prediction market platforms will almost certainly set records this autumn. More volume means more scrutiny, more state regulators with fresh data to cite in enforcement proceedings, and more political incentive for attorneys general who have already organized around this issue to escalate. The Ninth Circuit gave them a federal appellate citation to work with. Forty-four states have attorneys general who were already pressing the CFTC before they had that citation. Now they do.

Dani Lever's response to the ruling was swift, which is the right move for any general counsel managing an active circuit split. What it cannot do is resolve the underlying disagreement about whether the Commodity Exchange Act's preemption of state gaming law covers contracts on sporting events. That question is now formally open at the appellate level. It will stay open until it is not, and the states filing in the meantime are not filing to lose.