Kalshi Wins 2-1 Appeals Court Ruling Against New Jersey Over Sports Event Contracts

Prediction market platform Kalshi secured a major legal victory after a U.S. appeals court ruled that New Jersey gaming regulators cannot block the company from offering sports-related event contracts in the state. The decision strengthens the role of federal oversight in disputes between state regulators and federally licensed prediction markets.

Court Backs CFTC Exclusive Jurisdiction Over Event Contracts

The ruling came from the U.S. Court of Appeals for the Third Circuit, where a panel of judges issued a 2-1 decision stating that New Jersey does not have explicit authority over sports-related event contracts offered by entities regulated by the Commodity Futures Trading Commission (CFTC).

Kalshi filed lawsuits against New Jersey and other states last year after receiving cease-and-desist orders that prevented it from offering sports-related contracts. The company argued that it operates as a federally regulated commodities exchange and designated contract market (DCM), and that the Commodity Exchange Act supersedes state authority.

New Jersey officials argued that the Act’s savings clause preserves state jurisdiction over sports-related event contracts and maintained that such offerings violate state gambling laws. However, the majority opinion rejected this claim, stating that the clear text of the Act grants the CFTC exclusive jurisdiction over swaps, while allowing continued state regulation only for trades conducted outside designated contract markets.

Kalshi CEO Tarek Mansour described the decision as a “big win,” stating that prediction markets are widely used because they are fair, transparent, and reward users for making accurate predictions.

Dissenting Opinion Calls Contracts “Sports Gambling”

While the majority sided with Kalshi, one judge issued a dissenting opinion, describing Kalshi’s actions as a “performative sleight meant to obscure the reality that Kalshi’s products are sports gambling.” The dissent argued that because Kalshi facilitates gambling-like activity, it should remain subject to state regulation.

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