A federal appeals court has ruled that New Jersey’s gaming regulators cannot block residents from using Kalshi’s online prediction markets to trade contracts tied to sporting events, finding federal regulators hold exclusive authority over those products. On April 6, a three-judge panel of the Philadelphia-based 3rd U.S. Circuit Court of Appeals, in a 2-1 decision, concluded the U.S. Commodity Futures Trading Commission (CFTC) has sole jurisdiction over the sports-related event contracts Kalshi lists on its platform.
U.S. Circuit Judge David Porter, writing for the majority, said Kalshi’s sports-related contracts qualify as “swaps” traded on a CFTC-licensed designated contract market (DCM), and are therefore governed by the Commodity Exchange Act. The decision affirmed an earlier lower-court preliminary injunction that had allowed New York–based Kalshi to continue offering the contracts while the legal dispute proceeds. New Jersey had argued Kalshi’s listings violated state gambling laws, including prohibitions on wagers related to collegiate sports and age-based restrictions.
Kalshi’s founder and CEO Tarek Mansour hailed the ruling on social media, calling it “a big win for the industry and millions of users.” The CFTC also praised the outcome: spokeswoman Brooke Nethercott said the decision “affirms the goals of Congress,” pointing to the agency’s view that Congress granted it exclusive authority over trades conducted on DCMs. The CFTC has recently moved to block state efforts to regulate prediction markets; last week the agency sued Arizona, Connecticut and Illinois to prevent those states from imposing their own rules on similar platforms.
The 3rd Circuit’s decision is the first time a federal appeals court has directly addressed whether state gaming regulators can police prediction markets like Kalshi’s. The ruling could set a significant precedent for other providers that allow users to place financial-style bets on outcomes ranging from elections to sporting events. States have argued such platforms operate without required state gambling licenses and flout local safeguards, including age restrictions; supporters of Kalshi and the CFTC counter that these products are derivatives subject to federal oversight.
The panel was split, with one judge dissenting, underscoring the contentious and unsettled legal terrain. The decision leaves open possible next steps: New Jersey could seek an en banc rehearing by the full 3rd Circuit or petition the U.S. Supreme Court for review, and the broader wave of litigation between states, operators and the CFTC is likely to continue. For now, the ruling permits Kalshi to resume offering its sports-related event contracts to users in New Jersey while the case advances.
Kalshi and other prediction-market platforms say their contracts are a form of regulated financial instrument and point to the CFTC license as proof of oversight and consumer protections. State regulators and some lawmakers, however, have pushed back, arguing that traditional gaming laws should apply to exchanges that facilitate wagers on events like college sports. The appeals court decision marks a major legal win for Kalshi and the federal regulator, but it also signals the start of a broader, potentially long-running fight over the boundary between state gambling laws and federal commodities regulation.