Kalshi and authorities in the state of New Jersey have come together to ask the trial court presiding over the lawsuit to keep things on hold while the defendants in the case ask the United States Supreme Court to review the appellate court’s decision to enjoin New Jersey’s efforts to regulate Kalshi. The request from all parties was filed Tuesday and asks the district court to extend the current stay until the Supreme Court has responded to the New Jersey officials.
Their petition to the Supreme Court escalates the legal fight over the nature of prediction markets and state sovereignty, although it may not be the last time that the Supreme Court receives a request on the matter. In terms of gaming law history, the fact that the first supplication of the Supreme Court on this topic comes out of New Jersey bears considerable irony.
Injunction ruling in Kalshi v. Flaherty is headed to the US Supreme Court
The joint motion from Tuesday asks the US District Court for the District of New Jersey to extend the current trial delay, stating plainly that “defendants have indicated that they intend to seek further review of the Third Circuit’s decision in the U.S. Supreme Court.” The desired extension will continue “pending any decision by the U.S. Supreme Court to grant or deny certiorari and, should certiorari be granted, pending the Supreme Court’s final disposition of the case.”
The decision in question is the US Third Circuit Court of Appeals’ ruling upholding the district court’s order enjoining New Jersey authorities from enforcing a cease-and-desist order that New Jersey Division of Gaming Enforcement Director Mary Jo Flaherty sent to Kalshi in November 2025. Flaherty and the other defendants will be asking the US Supreme Court to review that decision, with their desired outcome being the Supreme Court overturning the Third’s ruling.
That petition will represent the first supplication to the US Supreme Court in a dispute between a prediction market exchange and a state government. However, it may not have the degree of finality on a national basis for the legal questions surrounding prediction market trading that many desire.
Supreme Court review may focus narrowly on injunction decision
As the Tuesday filing with the district court points out, there is no guarantee that the Supreme Court will grant the defendants’ request and review the Third’s ruling. Should the Supreme Court deny certification of the appeal, Kalshi v. Flaherty will proceed at the district court and the wait for a final, definitive ruling on the legal questions regarding prediction market trading will continue.
However, even if the Supreme Court does grant cert, the decision from the justices may not rise to the level of settling the legal questions once and for all. That’s because the Third Circuit ruling up for review is not on the merits of Kalshi v. Flaherty but rather Kalshi’s request for injunctive relief while that case is adjudicated.
For that reason, the Supreme Court’s opinion may focus narrowly on whether the Third erred in its reasoning and avoid the more substantive questions. A more thorough opinion on the overarching legal premises of preemption of state laws, whether trading of event contracts related to sporting events qualifies as gambling, and what if any role state governments have in regulation of exchanges may have to wait until an appeal on the merits of a case surfaces.
That might come from New Jersey as well after Kalshi v. Flaherty makes its way through the appellate system. Should that prove to be the case, it could produce an intriguing storyline.
New Jersey could play the role of catalyst again
In 2018, it was New Jersey that played the catalyst role in Murphy v. NCAA, which opened the possibility of legal sports wagering to most states in the US. Almost exactly eight years later, New Jersey is on the opposite side of a Supreme Court petition regarding online activity.
In Murphy, New Jersey sought to expand access to online sports betting, while in Kalshi, New Jersey is trying to restrict access to event contract trading. A broad decision in Kalshi v. Flaherty could be as significant a loss for the state as Murphy v. NCAA was a win, and it could have equally significant ramifications across the country.
The wait is now on to see whether the Supreme Court will grant cert to the defendants’ petition and, if it does, how the court will rule. That decision could begin to settle the legality of event contract trading in the US for good.
