Kalshi secured a significant legal victory when the Third U.S. Circuit Court of Appeals upheld a preliminary injunction blocking New Jersey regulators from enforcing state gambling laws against its prediction-market contracts. The ruling gives fresh weight to Kalshi’s argument that its platform operates under federal commodities law rather than state gaming rules.
In a 2–1 decision, the court found that the contracts at issue likely fall under the Commodity Exchange Act, placing them within the exclusive jurisdiction of the Commodity Futures Trading Commission at this stage of the case. That conclusion sharply strengthens Kalshi’s federal-preemption case and gives the company more room to keep operating while the broader legal fight continues.
The court tied sports outcomes to commercial consequences
The majority reasoned that Kalshi’s sports-related event contracts could qualify as swaps because the results of sporting events can carry financial, economic, or commercial consequences. By linking game outcomes to television, advertising, and local economic activity, the court treated these contracts as more than simple wagers.
That interpretation was central to the ruling because it moved the contracts into the scope of federal commodities law. Once the court accepted that these markets could have broader commercial significance, the basis for exclusive CFTC oversight became much stronger.
Kalshi welcomed the outcome as a turning point. Chief executive Tarek Mansour described the decision as a major win for both the industry and the platform’s users, underscoring the company’s position that federal market regulation—not state gambling law—should govern its business.
The broader legal fight is far from over
New Jersey responded forcefully and made clear the dispute is not settled. State officials rejected the ruling’s logic, while the dissent argued that Kalshi’s sports contracts are functionally no different from traditional sports bets and should remain subject to state regulation.
The case now sits inside a broader national patchwork of conflicting rulings. Nevada, Maryland, and Ohio have all produced different outcomes in related disputes, leaving prediction markets caught between competing interpretations of whether they are federally regulated derivatives or state-regulated gambling products.
That division across jurisdictions raises the stakes well beyond New Jersey. If the current split among courts continues, the issue is increasingly likely to move toward the U.S. Supreme Court, where a final answer may be needed to determine whether prediction markets can scale nationally under a single federal framework.