Kalshi Notches Victory Over New Jersey Gambling Regulators

The U.S Court of Appeals for the Third Circuit has granted Kalshi's request for a preliminary injunction against the New Jersey Division of Gaming Enforcement.

What's the Scoop?

• Motion Granted: Ruling 2-1 for the Third Circuit Court of Appeals, a panel of judges has granted Kalshi's request for a preliminary injunction against New Jersey state regulators (who themselves wanted to preemptively block sports event contracts), finding Kalshi's argument that federal law preempts state gambling regulations has a reasonable enough chance of winning to allow the ongoing offer of sports-based event contracts.
• Underlying Logic: The court affirmed that the CFTC holds exclusive jurisdiction over "swaps" traded on regulated exchanges, and that Kalshi's sporting event contracts qualify as swaps. Because Kalshi self-certified its contracts under CFTC rules, and the agency has not objected, they can be presumed as potentially lawful until a final court decision is reached.
• Other Outcomes: Kalshi is actively engaged in lawsuits with 10 U.S. states. The prediction market company has won preliminary injunction using the same logic against Tennessee and California, but has lost federal appeals arguments against the states of Maryland, Massachusetts, Nevada, and Ohio.