Welcome to New Jersey Insight, a periodic newsletter to make law and politics (through a New Jersey lens) more accessible.
A time existed when the State of New Jersey was not a frequent party before the Supreme Court of the United States. In fact, when I first started as a young lawyer at the New Jersey Attorney General’s Office nearly twenty years ago, the last major case that involved the state was Apprendi v. New Jersey, 530 U.S. 466 (2000),1 which was decided seven years prior. Though my office did at the time have one original jurisdiction case pending where we sued Delaware (sorry, Delaware) over a permitting dispute involving a liquefied natural gas unloading terminal, the case and its resolution did not—in my view—have far-reaching consequences beyond the two states. Overall, it was not uncommon for years to pass before a New Jersey matter of any significance would receive Supreme Court attention.
Not anymore. New Jersey has become not only a regular litigant before the Court, but also one in cases of consequence. For example, beginning nearly fifteen years ago, New Jersey pursued efforts to authorize sports gambling. The national sports leagues opposed the effort, citing a federal ban on state-approved sports gambling. In turn, New Jersey challenged the constitutionality of the ban itself in Murphy v. NCAA. The Court ultimately ruled for New Jersey in 2018 and struck the ban. The decision resulted in a proliferation of state-sanctioned sports gambling operations, both in New Jersey and throughout the country. Sports gambling outside Nevada went from zero to a $167 billion nationwide market today, with New Jersey accounting for over $12 billion or a 7.3% share of the national market.
In the environmental sphere, New Jersey objected to a planned interstate natural gas pipeline and refused to allow pipeline construction over its property. The pipeline developer, PennEast Pipeline Co., sued and argued that federal law permitted it to condemn state-owned property in order to construct the pipeline. When the matter ultimately reached the Court in 2021, the Court ruled against New Jersey 5-4, allowing private companies to condemn “all necessary rights-of-way.” The decision effectively removed one lever that states had in opposing pipeline construction.
More recently,2 New Jersey led the charge in fighting the White House’s effort to limit birthright citizenship. When the challenge reached the Court for the first time in 2025, New Jersey Solicitor General Jeremy Feigenbaum argued on behalf of the coalition of 22 states plus Washington, DC, and San Francisco. While the Court’s holding then focused on the scope of relief available to preliminarily pause an executive branch policy, the decision set the stage for when the matter returned to the Court and—on the merits—upheld the promise of birthright citizenship, impacting thousands and future generations.
In December 2025, New Jersey returned to the Court to defend its authority to issue administrative subpoenas in consumer fraud investigations without pre-enforcement federal court review. The Court unanimously rejected that position in April 2026 (ouch) and held that the subpoena recipient, who alleged that the demands in the subpoena chilled its First Amendment rights, may sue in federal court. As a result, recipients of such state subpoenas who want to raise a First Amendment defense now have the option of immediately seeking federal court review rather than waiting for the state process to play out. States, in turn, will need to carefully weigh their investigative strategies and factor in the possibility of federal court litigation in their calculus.
New Jersey’s role in consequential cases continues today. In this current Court term, New Jersey has three matters pending before the Supreme Court at the cert petition stage—where the Court evaluates whether to hear the matter or not. And each of them presents compelling issues that have far-reaching consequences beyond the borders of New Jersey if the Court takes them on. In this issue, I’ll go behind the curtain and dive into two3 of those matters.
Sports Betting and Prediction Markets: Flaherty v. KalshiEX, LLC, No. 26-299
Prediction markets are all the rage. They allow “participants [to] buy and sell contracts tied to the outcome of future events.” The value of these event contracts rises and falls based on the outcome of the event, and the price generally reflects the likelihood of the outcome. And the event can literally be anything with a yes or no answer. Will a certain candidate win an election? Will the FDA approve a certain drug?
Though the concept of a prediction market has an old vintage (of centuries), the popularity (and the economic value of these markets) has exploded in the past few years. Kalshi, one of the two leading market exchanges, arrived on the scene in 2018 and obtained federal approval to operate a prediction market exchange in 2020. Earlier this year, Kalshi enjoyed a valuation of $22 billion and operated a monthly volume of at least $17 billion. Its competitor, Polymarket, is valued at $15 billion with monthly volume hovering around $10 billion.
The arrangements traded on these markets are couched in terms of “event contracts” and “swaps,” but in common parlance, they sound like bets. And this is where the heart of the current dispute lies. Recall that the Court’s decision in Murphy v. NCAA in 2018 freed the states to authorize and regulate sports gambling. New Jersey, like many other states, jumped at the opportunity and quickly enacted a regulatory and taxing structure. Though it authorized sports betting, which generates over $200 million a year in tax revenue, New Jersey also enacted guardrails to curb excesses like “insider trading, gambling by minors, and compulsive gambling.”
Last year, Kalshi’s marketplace started to offer event contracts for sports outcomes, and per New Jersey, Kalshi heavily promoted its sports offerings. In response, New Jersey issued a cease-and-desist to Kalshi and argued that Kalshi’s platform amounted to sports wagering in violation of state law. Kalshi disagreed, ran straight to federal court, and asked it to prevent New Jersey officials from enforcing its law against Kalshi. The U.S. District Court granted the request, and the U.S. Court of Appeals for the Third Circuit upheld that decision.
Now, New Jersey is rolling the dice at the Supreme Court. The state is asking the Court to hear its appeal. At bottom, the question is simple. Who gets to regulate sports betting on prediction markets, the states like New Jersey or the federal government?
New Jersey argues that the answer is the states. The sports event contracts on Kalshi’s platform look, feel, and smell like sports wagering. New Jersey doubles down on Murphy’s recognition that federal law respects “the policy choices of the people of each State on the controversial issue of gambling.” New Jersey made its choice to authorize and regulate sports wagering. New Jersey does not believe that Congress—in empowering the U.S. Commodity Futures Trading Commission (CFTC) to oversee the derivatives market under federal law—would create a backdoor for the obscure federal agency to now regulate sports gambling, an area that has historically been in the realm of the states.
Unsurprisingly, Kalshi disagrees. It contends that its operations do not amount to “gambling” for purposes of state law. Instead, Kalshi argues that it offers a marketplace for event contracts (even if they involve sports). They fall outside of a casino setting or a regulated sports book with customary odds and a “house” to pay out bets. Event contracts that have “financial, economic, or commercial consequences,” according to Kalshi, are governed by federal law and overseen solely by the CFTC—thereby supplanting any role for the states to regulate their activities. After all, per Kalshi, it registered its prediction markets with the CFTC, and the CFTC has “exclusive jurisdiction” over Kalshi’s contracts. Understandably, Kalshi wants to avoid dealing with a regulatory patchwork of 50 different states and would rather deal with one federal regulator, the CFTC, which is—to say the least—incredibly supportive of the prediction markets.
Courts are split on this very issue, and the arguments on both sides are weighty, so the odds are high that the Court will hear New Jersey’s appeal.4 And watch for a variety of stakeholders and heavy hitters making their views known. In fact, supporters of New Jersey have already lined up, including a bipartisan coalition of 39 states and the District of Columbia, 145 Indian tribes and tribal organizations, and the National Football League. I’ll avoid predicting the outcome (pun intended) on the merits, but the consequence of whichever way the Court decides will be huge.
A loss for New Jersey means that all of the states and gaming regulators will sit on the sidelines while prediction markets proliferate with—at least under the current CFTC regime—unsatisfactory guardrails for the states. It may fall to sports leagues to address, for example, risks that affect the integrity of the sports (like insider trading within prediction markets). Current sports wagering platforms authorized by the states will likely feel (if they don’t already) that they are operating in an unfair market at a competitive disadvantage.
On the other side, a loss for Kalshi means that its sports offerings (along with Polymarket’s) will be subject to the laws of each state, a significant friction point for the growth of prediction markets as they will need to create a complex web of compliance regimes. I suspect that it wouldn’t spell the demise of prediction markets, but merely force them to operate in a less-than-ideal regulatory environment.
When 3-D Printable Guns and Computer Code Meet the First Amendment: Defense Distributed v. Davenport, No. 26-184.
Suppose a company wants to operate a factory for the purpose of manufacturing a particular class of firearms for civilian use. Such a company, surely, would be subject to any number of legal requirements at the local, state, and federal level. Among the panoply of possible legal issues involved (dare I say even the Second Amendment?), one would not ordinarily think that such a project would implicate the right to free speech under the First Amendment. Defense Distributed, in a sign of the technological age, is indeed making that case to the Court.
Based in Texas, Defense Distributed and its founder, Cody Wilson, made news in 2012 when Defense Distributed published computer code that would allow anyone with a 3-D printer to create a plastic gun which it called the “Liberator.” The U.S. Department of State, however, objected to its publication under the Arms Export Control Act. Defense Distributed relented and removed the files from public access while pursuing litigation. The parties ultimately reached a settlement, and Defense Distributed announced that it would publish on August 1, 2018, computer code for printing 3-D firearms, which are essentially untraceable.
Alarmed by the potential wide availability of untraceable firearms flooding the market, New Jersey Attorney General Gurbir Grewal issued a cease-and-desist letter to Defense Distributed days before the deadline. Citing the state’s public nuisance and negligence laws, the Attorney General demanded a stop to the publication of “printable-gun computer files” that were accessible to New Jersey residents. While Defense Distributed complied, it brought suit against the Attorney General in a federal court in Texas. During the pendency of litigation, in November 2018, New Jersey enacted a law that by and large prohibited the manufacturing and distribution of 3-D firearms in the absence of an appropriate registration or license. In its lawsuit, Defense Distributed also brought a challenge to this new statute.
I will spare you the twisted procedural machinations that followed, resulting in a transfer to the U.S. District Court in New Jersey. But bottom line, the District Court dismissed the lawsuit, and U.S. Court of Appeals for the Third Circuit upheld the dismissal. Defense Distributed now seeks Supreme Court review.
Though it raised below many arguments in support of its suit, and setting aside the procedural question, Defense Distributed pursues one substantive argument now before the Court. It maintains that its computer code, which allows for the 3-D printing of essentially untraceable firearms, deserves First Amendment protection. The Third Circuit rejected the First Amendment claim, finding that “purely functional code with no expressive purpose, use, or intent is simply not covered by the First Amendment.” And here, the Third Circuit concluded that Defense Distributed failed in its burden to show that its computer files had any “indicia of expressiveness” that would be necessary to prompt First Amendment oversight.
The matter is in its early stages. New Jersey will file its response to Defense Distributed’s cert petition by November 25. Until then, it’s unclear to me how attractive this case may be to at least four justices on the Supreme Court in order to grant certiorari. The procedural wrangling is likely a strong disincentive to accept the appeal, especially for a Court that prizes the resolution of issues that brings finality to a case.
The First Amendment argument deserves, in my view, a serious evaluation. Courts are divided on whether computer code, with or without a semblance of expressiveness, should fall within a First Amendment umbrella. Beyond computer files for 3-D printable firearms, this may have implications for the world of artificial intelligence. AI is evolving by orders of magnitude, and as it shows more and more attributes of autonomy and agency (such as “recursive self-improvement”), the day may come when courts will have to decide on how far the First Amendment will reach AI-generated materials.
The days of New Jersey’s infrequent appearances before the Supreme Court are behind us. Today, whether in the world of prediction markets, firearms, civil rights, and in a wide variety of cutting-edge issues, New Jersey is a critical player in shaping the Court’s docket and the national conversation. None of this happened overnight, and a number of factors—like the shifts in Washington, DC, politics and New Jersey’s response to them—were at play. In the years ahead, I expect the trend—and New Jersey’s leadership—to continue.
In Apprendi, the Court held that any fact that serves to increase “the penalty for a crime beyond the prescribed statutory maximum, other than the fact of a prior conviction, must be submitted to a jury and proved beyond a reasonable doubt.”
In this intervening time, New Jersey had an additional appearance before the Court. New York and New Jersey were locked in a dispute over New Jersey’s insistence to withdraw from a bistate compact. The compact created the Waterfront Commission of New York Harbor in 1953 to “go after the mob and corrupt labor practices at the New York-New Jersey container port.” In New Jersey’s view, the Commission outlived its usefulness, and New Jersey wanted out. New York refused and sued New Jersey in the Supreme Court. In 2023, the Court sided with New Jersey unanimously (!) and allowed New Jersey to withdraw.
Because the third case is likely to be held in abeyance, I’ll defer on covering it in this newsletter. The case, Davenport v. Association of New Jersey Rifle and Pistol Clubs, asks whether the Second Amendment permits New Jersey’s restrictions on semi-automatic assault rifles and large capacity magazines. The Supreme Court, however, will already be hearing two separate cases in December that will evaluate whether restrictions on semi-automatic assault rifles are permissible under the Second Amendment. In its papers to the Court, New Jersey requested that its certiorari petition be placed on hold pending the resolution of the other two cases.
This would be a classic event contract on the prediction markets. Kalshi, however, barred any trading on whether the Court grants New Jersey’s cert petition. Polymarket has no such qualms and placed the “odds that the case will be accepted by December 31, 2026...at 45%.”