Kalshi Wins: New Jersey Cannot Regulate Event Contracts

Jonathan Rodriguez

Written by: Jonathan Rodriguez

Published: Tue Apr 07, 2026, 10:00 am ET

Read Time: 3 minutes

Kalshi Wins: New Jersey Cannot Regulate Event Contracts

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The U.S. Court of Appeals for the Third Circuit has delivered a major legal victory for Kalshi, the federally regulated prediction market.

In a 2-1 ruling, the court decided that New Jersey gambling regulators cannot block or regulate Kalshi's sports-related event contracts, reaffirming the company's rights under federal law. The decision highlights the growing tension between state-level gaming authorities and federally licensed prediction market operators.

U.S. Court of Appeals Affirms Kalshi Victory

The ruling specifically blocks New Jersey lawmakers from enforcing state gambling regulations on Kalshi. The court determined that Kalshi's event contracts are financial instruments under the Commodity Exchange Act, not conventional gambling products.

Kalshi operates as a Designated Contract Market (DCM) licensed by the Commodity Futures Trading Commission (CFTC). Under federal law, its "event contracts" are classified as swaps, which preempts any state-level attempts at regulation. 

The appellate judges emphasized that the federal regulatory framework takes precedence over state gambling laws, providing Kalshi legal clarity in New Jersey.

Moreover, the 2-1 decision was authored by Judge David J. Porter, joined by Chief Judge Michael A. Chagares, while Judge Jane Richards Roth dissented. Porter wrote that Kalshi would suffer "irreparable harm" if blocked and is likely to succeed on the merits. 

Judge Roth argued that Kalshi's contracts resembled traditional gambling, akin to US online sportsbooks, and should be subject to state oversight.

Additionally, the court affirmed a preliminary injunction originally granted in 2025 by a lower court. This injunction allows Kalshi to continue offering event contracts in New Jersey while the litigation continues. 

Legal Context and Wider Implications

Kalshi's victory comes amid ongoing disputes across the United States. Several states, including Nevada, have actively restricted prediction markets, asserting that such platforms fall under state gambling regulations. 

Meanwhile, Kalshi and other platforms argue that their operations are federally licensed financial instruments, not conventional betting.

The ruling in New Jersey sets a precedent for other states attempting to regulate prediction markets. It reinforces CFTC authority over event contracts and could influence cases in states like Massachusetts, New York, and Illinois. 

Analysts suggest that this decision may guide future litigation, clarify licensing requirements, and create opportunities for broader expansion of federally sanctioned prediction markets.

Industry and Regulatory Reactions

The ruling has triggered mixed reactions. Some industry observers celebrate it as a landmark affirmation of federal oversight, which may encourage new platforms to operate under CFTC licenses.

Conversely, state regulators argue that Kalshi's contracts still resemble traditional New Jersey gambling products and may require consumer safeguards, age verification, and taxation similar to US online sportsbooks.

Meanwhile, Nevada maintains a hard stance against prediction markets, reflecting the ongoing conflict between state authority and federal jurisdiction.

While the appellate affirmation is a massive signal of success for Kalshi, the underlying litigation technically continues, meaning the final outcome could still evolve. 

Nevertheless, the ruling allows Kalshi to operate freely in New Jersey for now and reinforces the federal government's role in regulating prediction markets.

Jonathan Rodriguez
Jonathan Rodriguez

Jonathan is an avid basketball fan, and is often looking forward to the next upcoming NBA season when not checking players' stats during games. He also likes to keep his ears on the ground for the latest rumblings in the online casino industry.

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