Kalshi Secures Victory in Legal Fight Against New Jersey Regulators

(AsiaGameHub) –   A federal appeals court has delivered Kalshi a significant legal win, heightening tensions between state gambling regulators and prediction platforms. In a 2–1 ruling, the U.S. Court of Appeals for the Third Circuit decided that New Jersey cannot bar Kalshi from providing sports-related event contracts to its in-state users. The panel determined these products fall exclusively under the purview of the Commodity Futures Trading Commission (CFTC).

New Jersey Asserted Its Jurisdiction Over All Types of Sports Betting

The ongoing conflict revolves around whether sports prediction markets qualify as financial trading or merely sports betting in another form. Kalshi has long stood by the former argument. Its users can trade contracts linked to everything from elections to sporting events, and the company maintains these are “event contracts”—a type of derivative overseen by the CFTC.

New Jersey regulators held a contrasting view. The state issued a cease-and-desist order in 2025, claiming Kalshi was offering unlicensed sports betting, including wagers that violated state law. This conflict sparked a legal dispute that has now reached a critical juncture. With similar challenges unfolding in other states, the court’s decision could set a precedent.

Judge David Porter, one of the two judges who sided with Kalshi, concluded federal law likely takes precedence over state authority in this area. Since Kalshi’s contracts qualify as swaps traded on a CFTC-regulated exchange, oversight rests solely with the federal agency. This interpretation significantly limits how states can intervene—even on matters like sports, which are traditionally regulated at the state level.

The Wider Legal Conflict Is Far From Resolved

Not all judges agreed. Judge Jane Richards Roth, the sole dissenter, argued Kalshi’s offerings were nearly identical to conventional sports betting and should face the same regulations as bookmakers. State authorities share this concern, fearing the situation could create a regulatory gap—allowing users to access betting-like products without the safeguards typically required in licensed markets.

Kalshi CEO Tarek Mansour praised the decision, calling it a win for users and the broader prediction market sector. The CFTC also supported this stance, emphasizing Congress granted it exclusive authority over trading on regulated exchanges. The federal agency even recently filed a lawsuit against Arizona, Illinois, and Connecticut over their attempts to control prediction markets.

Congress gave the ​CFTC exclusive jurisdiction over trades ⁠on DCMs, and this decision affirms the goals of Congress.

Brooke Nethercott, CFTC spokesperson

Despite their defeat, New Jersey authorities are not ready to concede. They are exploring options like a rehearing before the full appellate court. Judges in several other jurisdictions have also taken a more skeptical stance toward prediction markets. Experts say the matter will almost certainly reach the Supreme Court within the next few years for a final resolution.