Appeals Court Sides With Kalshi in Dispute With New Jersey

A U.S. appeals court has handed Kalshi a major legal win, ruling that New Jersey cannot apply state gambling laws to the company's sports-related event contracts. In a 2–1 decision, the U.S. Court of Appeals for the Third Circuit said the Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over the contracts, characterizing them as swaps traded on a CFTC-licensed platform. Judge David Porter wrote that federal oversight controls in this area, and the panel upheld a preliminary injunction that had already halted New Jersey's cease-and-desist order. The ruling is notable as the first federal appeals court decision to squarely address whether prediction-market contracts are governed by federal financial regulation or by state gambling regimes. The decision was not unanimous. Judge Jane Richards Roth dissented, arguing Kalshi's products function as sports betting and are not transformed into futures-like instruments merely through registration and labeling. Reuters reported that Roth said the offerings were "virtually indistinguishable from the betting products available on online sportsbooks." New Jersey is considering its next steps. Reuters reported the state could seek a rehearing by the full Third Circuit. Similar conflicts involving prediction markets and state gaming regulators are also playing out in Nevada, Massachusetts, Arizona, Connecticut, and Illinois. For Kalshi, the Third Circuit ruling strengthens its nationwide case that the CFTC—and not state regulators—sets the rules for these markets. The CFTC has supported the company's federal position in other litigation, and the new appellate decision adds weight to that argument. The wider legal fight remains active across multiple jurisdictions and could ultimately reach an en banc review or the U.S. Supreme Court. Related: CFTC Takes Three States to Court Over Prediction Market Control Disclaimer: The information presented in this article is for informational and educational purposes only and does not constitute financial advice. Coin Edition is not responsible for any losses arising from the use of content, products, or services mentioned. Readers should exercise caution before taking any action related to the company.