Kalshi Scores Major Appeals Court Win Over New Jersey

• The Third Circuit ruled 2-1 in Kalshi’s favor against New Jersey. 
• The court held that the CFTC has exclusive jurisdiction over Kalshi’s sports-related event contracts. 
• Decision strengthens prediction markets’ federal regulatory argument nationwide.

Kalshi secured a major legal victory after a U.S. appeals court ruled that New Jersey cannot regulate its event contracts. The decision strengthens the platform’s federal case and reinforces the Commodity Futures Trading Commission’s authority. 

The ruling also marks a key moment in the broader legal battle between prediction markets and state gaming regulators.

Court Backs Kalshi’s Federal Argument

The U.S. Court of Appeals for the Third Circuit ruled 2-1 in Kalshi’s favor, blocking New Jersey from enforcing state gambling laws on the platform’s sports-related event contracts.

Judge David Porter wrote that Kalshi’s contracts are swaps traded on a CFTC-licensed platform, meaning the federal regulator holds exclusive jurisdiction. The decision affirms a preliminary injunction that had already stopped New Jersey’s cease-and-desist order.

The ruling represents the first federal appeals court decision addressing whether prediction market contracts fall under federal financial regulation or state gambling laws.

Split Decision Keeps Legal Fight Open

The ruling was not unanimous. Judge Jane Richards Roth dissented and argued that Kalshi’s offerings were effectively sports betting products, not something transformed into futures simply by registration and labeling. 

Reuters reported that Roth said the company’s offerings were “virtually indistinguishable from the betting products available on online sportsbooks.” 

New Jersey is now weighing its next move. Reuters reported that the state could ask the full Third Circuit to rehear the case. Similar disputes are also active in Nevada, Massachusetts, Arizona, Connecticut, and Illinois, which means the legal conflict is still spreading even after Kalshi’s Philadelphia win. 

Industry Battle Moves to Next Phase

The new decision gives Kalshi a stronger footing in its national fight over who controls prediction markets. The CFTC has already backed the company’s federal argument in other litigation, and the Third Circuit ruling now adds appellate support to that position. 

For now, Kalshi keeps a major legal advantage in New Jersey. Nevertheless, the broader battle is still moving through multiple courts, and the path ahead could still lead to en banc review or the U.S. Supreme Court. 

Related: CFTC Takes Three States to Court Over Prediction Market Control