The Attorney General of New Jersey has asked the U.S. Supreme Court to hear a case that could determine the fate of sports prediction markets.

New Jersey's request follows split decisions in the lower courts. The Supreme Court accepts a fraction of so-called petitions of certiorari, but the high court could be compelled to weigh in given the growing disputes between states, which regulate gambling, and federal regulators, who oversee the event contracts that drive prediction markets.

A Supreme Court case would be closely watched by online betting firms like DraftKings and Flutter, along with newer prediction-market platforms Kalshi and Polymarket.

Polymarket has a data sharing partnership with Dow Jones, the publisher of Barron's.

"Companies like Kalshi claim to offer legal sports betting in all 50 States, but they refuse to follow the gambling laws of any State," New Jersey Attorney General Jennifer Davenport said in a press release Wednesday.

"These companies have no right to offer their sports bets without following state law, which is why dozens of States across the ideological spectrum have opposed them," Davenport said. "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."

Kalshi didn't immediately respond to a request for comment. The Attorney General's office declined to make Davenport available for an interview.

If the Supreme Court agrees to hear the case, it's likely to revolve around the definition of a "swap."

Following the 2008-09 financial crisis, Congress sought to bring the over-the-counter financial contracts known as swaps under the federal regulation of the Commodity Futures Trading Commission. With the passage of Dodd-Frank in 2010, an intentionally broad definition of "swap" was adopted to encompass swaps that hadn't yet been invented.

In January 2025, Kalshi listed its first ever swap tied to a sporting event. The event contract allowed traders to take a position on who would win that year's Super Bowl.

Trading of sports event contracts has exploded since then. In August 2025, Kalshi saw $657.6 million of sports trading volume. This August, it had $12.6 billion.

Gary Gensler, who led the CFTC during the writing of Dodd-Frank, told Barron's in an April interview that he never intended for swaps tied to sporting events.

In the petition filed to the Supreme Court on Wednesday, Davenport asked the justices to decide whether Dodd-Frank "pre-empted States from regulating sports bets that occur within their jurisdictions if those bets are offered on markets registered with the Commodity Futures Trading Commission."

Sports prediction markets have upended the U.S. sports betting industry. Since sports event contracts are regulated at the federal level, they are legal nationwide to anyone over the age of 18, even in states that haven't legalized traditional sports betting, such as California and Texas.

Shares of DraftKings are down 41% since Kalshi listed its 2025 Super Bowl contract; Flutter, the parent-company of FanDuel, has seen its stock decline 62% over the same period. The companies have launched their own sports prediction markets to stay competitive.

The petition doesn't guarantee that the Supreme Court will take up the case. Four of the nine justices will have to vote to accept the petition before oral arguments are scheduled. The Court receives hundreds of petitions a year and accepts few.