US Court of Appeals blocks New Jersey regulation of Kalshi prediction market
Change
The US Court of Appeals ruled 2-1 that the Commodity Futures Trading Commission (CFTC) holds exclusive jurisdiction over Kalshi’s sports-related event contracts traded on its designated contract market (DCM), preventing New Jersey from enforcing state gambling laws against those listings.
Why it matters
State legal teams can no longer rely on routine state gambling enforcement to stop event contracts listed on a CFTC-designated contract market, removing a local enforcement tool and narrowing state regulatory remedies. Platform compliance and product teams must now prioritise adherence to CFTC DCM rules when offering sports-event contracts to US residents rather than meeting divergent state licensing regimes.
Implications
- • Compliance teams at prediction-market platforms that operate or plan to operate CFTC-licensed designated contract markets (DCMs) must document and maintain full DCM-rule compliance for sports-event contracts to justify federal oversight and reduce the risk of state injunctions.
- • State attorneys general and state gaming regulators' legal teams must decide whether to file for en banc rehearing in the US Court of Appeals for the Third Circuit or to appeal in other federal circuits; failing to pursue timely rehearing or appeal will leave them unable to use state gambling statutes to block DCM-listed event contracts.
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