US appeals court bars New Jersey from regulating Kalshi prediction market
Prediction-market operators can offer sports contracts in New Jersey
Change
A three-judge panel of the US Third Circuit ruled 2-1 that the US Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over sports-related event contracts traded on a CFTC-licensed designated contract market (DCM), preventing New Jersey regulators from blocking Kalshi’s listings in the state.
Why it matters
State-level gambling statutes cannot be used to stop trades in event contracts that meet the federal definition of swaps on a CFTC-licensed exchange. That shifts enforcement authority to federal oversight and narrows the legal grounds states can use to bar specific listings.
Implications
- — Prediction-market operators running US Commodity Futures Trading Commission (CFTC)-licensed designated contract markets (DCMs) — must keep sports-related event contracts accessible to New Jersey users immediately unless a court issues an injunction — otherwise they risk creating operational disruptions and forfeiting a federal-preemption defence by voluntarily blocking access.
- — State attorneys general and state gaming control boards — must file for en banc rehearing or seek emergency relief now within the appellate process if they want to preserve state-law enforcement against CFTC-regulated event contracts — failing to pursue rehearing promptly will leave them unable to enjoin trades on CFTC-licensed markets.
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