A federal appeals court rules New Jersey cannot block Kalshi users in the state from sports-related event contracts, finding CFTC has exclusive jurisdiction
A federal appeals court ruled on Monday that New Jersey gaming regulators cannot prevent Kalshi from allowing people in the state …
ReutersNate Raymond
Context & Ripple Effects
Kalshi's sports contracts have produced conflicting state-level outcomes: it previously sued Nevada regulators over their attempt to stop the products, while a Nevada judge later treated the contracts as subject to state gaming enforcement in a ruling favoring Nevada gaming oversight.
The New Jersey decision cuts against that trajectory and follows a Massachusetts preliminary injunction that barred the platform from offering sports bets to residents under Massachusetts' interim order. The immediate significance is less the product itself than the emerging conflict over whether state gaming law can restrict a federally regulated event-contract venue.
First-order effects
Kalshi can continue offering sports-related event contracts to users in New Jersey without a state gaming-regulator block, subject to the appellate ruling's scope.
The decision strengthens the CFTC's claim to primary authority over these contracts in New Jersey and weakens the state's ability to treat them as locally regulated sports wagering.
Second-order effects
Other state gaming regulators confronting Kalshi gain a sharper, but conflicting, federal-court record to litigate against; the earlier Nevada challenge to state enforcement now sits within a more consequential jurisdictional split.
Kalshi's competitors and prospective contract-market entrants may see a clearer path to nationwide distribution, while licensed sportsbooks face pressure from an adjacent product category that may not be governed by the same state-by-state access rules.
Third-order effects
If appellate courts continue to diverge, the boundary between CFTC-regulated event markets and state-regulated gambling is likely to be resolved through higher-court review or federal policy rather than by individual state enforcement actions.
A federal-jurisdiction outcome would shift competitive advantage toward platforms able to operate under a single national regulatory framework; a state-enforcement outcome would preserve the fragmented licensing model used for sports betting.
The trend: This is one data point in the contest over whether digital, federally regulated markets can bypass state-by-state gatekeeping when their products resemble locally regulated gambling.
One of the many challenges in this case: The Dodd-Frank Act amended the CEA to give the CFTC **discretionary power** to review and prohibit certain types of contracts, including ... Gaming. The CFTC exercised this discretion to write Rule 40.11(a)(1), which created a
Kalshi scores its biggest win yet: a split appellate decision holding that sports event contracts (85% of its business) likely fall under federal jurisdiction, noting the CFTC has authority to stop those contracts but hasn't. The dissent called them “virtually indistinguishable […
Judge Roth dissent: “I would also hold that conflict preemption does not apply because Kalshi is not precluded from complying with both New Jersey and federal law, and because New Jersey's regulations do not undermine the congressional objectives behind the Act.” [image]
Judge Roth dissent: “These offerings are virtually indistinguishable from the betting products available on online sportsbooks, such as DraftKings and FanDuel.” [image]
Judge Roth dissent: “I see Kalshi's actions as a performative sleight meant to obscure the reality that Kalshi's products are sports gambling. Because Kalshi is facilitating gambling, it can be subjected to state regulation.” [image]
The Third Circuit ruled in Kalshi's favor. People use prediction markets because they're more fair, transparent, and reward being right. Free markets work. We should keep them that way. This is a big win for the industry and millions of users. [image]
Huge win for @Kalshi (and all PMs) in the 3rd Circuit. This is the first appellate ct to weigh in and sets important precedent for related litigation. Key takeaways: 1)CFTC has exclusive jurisdiction over swaps 2)Sports event contracts are swaps 3)Enforcing state gambling laws [i…
I've said it multiple times already, no matter what side you're on in the Prediction Markets debate the law is clear. CEA (especially its Dodd-Frank changes) make clear the CFTC's regulatory authority, and anyone arguing otherwise is doing so at the behest of the gambling lobby.