The future of prediction markets may soon be determined by the Supreme Court. New Jersey has asked the court to resolve a legal debate impacting the billions wagered across various platforms. These markets are heavily supported by the Trump administration, and the current dispute centers on regulatory control of sports betting on platforms like Kalshi.

Prediction market sites such as Kalshi allow bets on many aspects, including executive calls and elections, but sports betting remains the most popular. It typically accounts for 80% of weekly trading volume on these platforms. New Jersey’s petition comes after conflicting decisions from federal appeals courts. The Third Circuit upheld the Commodity Futures Trading Commission’s exclusive oversight, while the Ninth Circuit ruled in favor of state regulation.

New Jersey’s Attorney General argues that the Commodity Exchange Act does not permit prediction market operators to bypass state law, highlighting that states traditionally hold power over health and safety issues, including gambling. Their petition states, “Nothing in the Act gives the CFTC unprecedented authority to become the sole regulator of sports gambling in this country.”

Kalshi insists that federal financial regulations apply, overriding state laws. Dani Lever, Kalshi’s spokeswoman, remarked, “Kalshi is an open, nationwide financial exchange. It cannot be regulated by 50 different regulators.” Established sports betting services, like FanDuel and DraftKings, have opposed the prediction market sector, seeing it as a fast-growing competitor that undermines existing frameworks.

If the Supreme Court agrees to take on New Jersey’s petition, the case might be argued this fall and a decision would be expected by next summer.