Federal Appeals Court Rules New Jersey Cannot Regulate Kalshi's Prediction Markets
A federal appeals court has determined that New Jersey lacks authority to regulate Kalshi's prediction markets, affirming the Commodity Futures Trading Commission's exclusive jurisdiction over such platforms.
A federal appeals court has ruled that New Jersey cannot regulate Kalshi's prediction markets, affirming the Commodity Futures Trading Commission's (CFTC) exclusive jurisdiction over such platforms. The U.S. Court of Appeals for the Third Circuit, in a 2-1 decision, determined that the CFTC has sole authority over sports-related event contracts offered by Kalshi, a federally licensed prediction market platform.
Kalshi CEO Tarek Mansour hailed the decision as a significant victory for the industry and its users.
The ruling follows a series of legal challenges between state regulators and prediction market operators. In March 2025, New Jersey issued a cease-and-desist letter to Kalshi, alleging that its sports-related event contracts violated state gambling laws. Kalshi responded by suing the state, arguing that its contracts are regulated by the CFTC under the Commodity Exchange Act.
The dissenting judge, Jane Richards Roth, contended that Kalshi's offerings are virtually indistinguishable from traditional sports betting products.
This decision is part of a broader legal landscape where the CFTC has recently filed lawsuits against Arizona, Connecticut, and Illinois, challenging their attempts to regulate prediction markets.
The ongoing legal battles underscore the complex interplay between federal and state authorities over the regulation of emerging financial platforms like prediction markets.