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Polymarket and Kalshi face possible regulation as Supreme Court monitors the situation

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Kalshi logo on a smartphone sitting on a laptop keyboard.

Picture it: Prediction markets like Kalshi, platforms which allow users to make "predictions" on almost anything for financial gain, platforms which are plagued with accusations of insider trading, are actually regulated by U.S. state governments under gambling laws.

It could be a future possibility, if the Supreme Court could be convinced to make it happen.

As reported by The Hill, multiple states have filed petitions to enforce sports gambling laws on Kalshi and platforms like it, including New Jersey and Nevada, which are respectively home to gambling hubs Atlantic City and Las Vegas. And the outcomes of each case could potentially see the eventual involvement of the Supreme Court.

SEE ALSO: France orders Polymarket blocked over illegal gambling promotion

In the U.S., each state regulates its own gambling laws, including sports betting, which is legal in 39 states and Washington DC as of May 2026. However, Kalshi and "prediction market" platforms like it are federally regulated, sitting under the watch of the Commodity Futures Trading Commission (CFTC), which oversees America's financial derivatives markets. (Polymarket is actually not registered in the U.S. or regulated by the CFTC, though it has established a U.S. outpost which is.) This means these platforms can operate in all 50 states and currently do not answer to state gambling laws — Kalshi has argued it offers "legal sports event contracts," not bets.

However, a bipartisan coalition of 44 states signed a letter in July, declaring prediction market platforms "a new form of casino used primarily for a few to manipulate others — the type of harms squarely within States' historic police powers to regulate gambling."

Meanwhile, President Donald Trump has insisted "it is critically important that the CFTC's exclusive authority over Prediction Markets is maintained, and that they will thrive," even considering his own platform. The president's son, Donald Trump Jr., not only has a financial stake and an advisory role in Kalshi, but is also set to see his venture capital firm invest $300 million in Polymarket.

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On Sept. 2, New Jersey officials petitioned the Supreme Court to enforce sports gambling laws on Kalshi. "Kalshi bills itself as 'the first app for legal sports betting in all 50 states' and believes it can offer that 'legal sports betting' without following the sports-gambling laws of any of those 50 States," the petition read.

The petitioners — New Jersey attorney general Jennifer Davenport and New Jersey Division of Gaming Enforcement interim director Mary Jo Flaherty — said that Kalshi and platforms like it had "discovered a major sports-gambling loophole in the 2010 Dodd-Frank Act" enacted after the 2007–2008 financial crisis. The Act, they said, allows Kalshi to define its offerings as financial "swaps" instead of "bets."

The important part here is that in April, the New Jersey case was actually ruled by the U.S. Court of Appeals for the Third Circuit in favor of Kalshi, meaning the platform could keep on offering its "legal sports event contracts" on college sports within the state's jurisdiction. However, that decision clashes with another decision made in Aug. by the Ninth Circuit, which covers Nevada among other states. An appeal from the Nevada Gaming Control Board saw the Court of Appeals siding not with Kalshi but with the state gaming regulator, which "sent a cease-and-desist letter notifying Kalshi that it was running a sports betting platform in violation of Nevada statutes and gaming regulations." Essentially, the differing state results could get SCOTUS' attention on a federal level.

Similar cases have been filed in Connecticut, New York, Arizona, Minnesota, and more states.

Next stop? The Supreme Court appeal from the New Jersey regulators. However, actually getting SCOTUS to consider the request isn't guaranteed, with the court receiving thousands each year and granting very few for consideration.

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