A federal appeals court delivered a significant legal victory Monday to prediction market company Kalshi, blocking New Jersey gaming officials from shutting down the platform’s sports betting operations within state borders.
The Philadelphia-based 3rd U.S. Circuit Court of Appeals decided by a 2-1 margin that federal commodity trading regulations take precedence over state gambling laws when it comes to Kalshi’s sports-related event contracts.
The decision represents a crucial win for Kalshi amid growing tensions between prediction market companies and state gaming authorities across the country. These platforms have faced increasing scrutiny from regulators who claim they operate without proper licensing.
State officials have contended that companies like Kalshi violate local gaming statutes, including rules that prevent individuals under 21 from placing wagers, while operating without required state permits.
New Jersey took action against Kalshi last year, issuing a cease-and-desist order claiming the company’s sports betting contracts violated state laws that specifically ban wagering on college athletics.
In response, Kalshi filed a lawsuit defending its operations. The company maintained that its registration as a designated contract market under the U.S. Commodity Futures Trading Commission provides legal authority for its activities. Kalshi argued that its event contracts qualify as “swaps” under federal Commodity Exchange Act regulations.
The company had not provided a response to requests for comment as of Monday evening.
