Kalshi continues to dance between the legal raindrops in the Garden State.
The prediction market operator scored a big win in New Jersey on Monday, as two out of three judges for the U.S. Court of Appeals for the Third Circuit affirmed a lower-court decision in Kalshi's favor.
That district court decision had granted a preliminary injunction for Kalshi against state gambling regulators seeking to shut down trading of the company's sports-related event contracts.
- A federal appeals court allowed Kalshi to continue offering sports event prediction contracts in New Jersey by upholding a preliminary injunction against state regulators.
- The majority ruled that federal commodities law gives the CFTC exclusive authority over Kalshi’s contracts, overriding state gambling regulations.
- The decision was split, with a dissent arguing Kalshi’s products resemble traditional sports betting and should be regulated by the state.
In short, business as usual can continue for Kalshi in New Jersey.
“Kalshi has met its burden for preliminary injunctive relief,” the two-judge majority decision reads.
As is happening in several other states, Kalshi and New Jersey regulators are butting heads over whether federal commodities law and the oversight of the company’s federal regulator, the Commodity Futures Trading Commission, trumps local gambling rules.
“New Jersey frames the issue broadly (regulating all sports gambling) rather than narrowly (regulating trading on federally designated contract markets),” Monday’s decision said. “The text of the [Commodity Exchange Act] suggests that the narrow framing is the better reading. The Act preempts state laws that directly interfere with swaps traded on DCMs. Kalshi’s sports-related event contracts are swaps traded on a CFTC-licensed DCM, so the CFTC has exclusive jurisdiction.”
The judges added that the lower court “did not abuse its discretion by finding that Kalshi would more likely than not suffer irreparable harm absent the preliminary injunction and that the remaining preliminary injunction factors also weigh in favor of Kalshi.”
Big dub
The New Jersey sports betting decision is a much-needed legal win for Kalshi.
In another gambling hotbed, Nevada, Kalshi has recently been dealt legal setbacks that culminated in the company having to cease trading of sports and election-related contracts.
However, the New Jersey decision was not unanimous. It's possible the state side could seek a review of the court's decision in the next two weeks.
Big win for Kalshi at the Third Circuit, but split decision means possible rehearing en banc. https://t.co/XZ2F09uFht
— Daniel Wallach (@WALLACHLEGAL) April 6, 2026
Moreover, the dissenting opinion highlights how contentious the sports-related event contracts offered by prediction markets can be, with state gambling regulators contending they are just illegal and unlicensed sports wagering businesses.
There are many lawsuits raging across the U.S. now over the legality of sports event contracts. The CFTC has even begun filing lawsuits of its own against states, with the agency aiming to reassert its regulatory rights.
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If it quacks like sportsbook...
A lot of what's driving the legal conflict has to do with the fact that the trading of sports event contracts can really look and feel a lot like what's offered by state-regulated online sportsbooks.
Monday's dissenter, Circuit Judge Jane Roth, wrote that she actually went to Kalshi’s page for the Jan. 3 Carolina Panthers-Tampa Bay Buccaneers football game and noted she could have bet on the winner, the point spread, the total, and anytime touchdown scorers.
“These offerings are virtually indistinguishable from the betting products available on online sportsbooks, such as DraftKings and FanDuel,” Roth wrote.
“I see Kalshi’s actions as a performative sleight meant to obscure the reality that Kalshi’s products are sports gambling,” Roth added. “Because Kalshi is facilitating gambling, it can be subjected to state regulation.”
More to come.
