Lawsuits

Court Rules States Can't Regulate Kalshi Bets

Are prediction markets a legitimate federally regulated financial tool or dangerous gambling in disguise?

Published APR 7

Court Rules States Can't Regulate Kalshi Bets

Story

Above: A Kalshi billboard in New York on Oct. 27, 2025. Image credit: Michael Nagle/Bloomberg/Getty Images

The Facts

A Third Circuit Court of Appeals panel ruled 2-1 on Monday that New Jersey cannot enforce state gambling laws against prediction market platform Kalshi, finding that the U.S. Commodity Futures Trading Commission (CFTC) holds exclusive jurisdiction over the company's sports-related event contracts.
Ars Technica
Court House News
The majority opinion, authored by U.S. Circuit Judge David J. Porter, found that Kalshi's sports-related event contracts qualify as "swaps" under the Commodity Exchange Act, which preempts state law and places oversight solely with the CFTC.
Engadget
Front Office Sports
New Jersey had issued Kalshi a cease-and-desist letter in March 2025, alleging the platform offered unauthorized sports wagers in violation of state law, including a constitutional ban on collegiate sports betting. Kalshi responded by suing the state.
The Wall Street Journal
CoinDesk
Dissenting Judge Jane Richards Roth wrote that Kalshi's offerings were "virtually indistinguishable" from products on sportsbooks like DraftKings and FanDuel, arguing the platform was "facilitating gambling" and could therefore be subjected to state regulation.
Gambling News
Court House News
New Jersey Attorney General Jennifer Davenport said the state "profoundly" disagreed with the ruling and was evaluating all options, including a potential rehearing before the full Third Circuit. The non-unanimous decision makes such a request eligible.
The Block
ESPN.com
This ruling comes as the CFTC has sued Arizona, Illinois and Connecticut over their attempts to regulate prediction markets. Some experts say that the broader legal dispute — spanning more than 20 lawsuits — is likely to reach the U.S. Supreme Court.
Front Office Sports
New York Post

Sources Split

LEFT

CENTER

RIGHT

ESTAB
CRIT

CENTER

PRO
ESTAB

The Spin

Narrative A

This ruling is a landmark moment, affirming that federal law governs prediction markets, not a chaotic patchwork of state gambling rules. Kalshi operates under CFTC oversight, and sports-event contracts qualify as swaps under the Commodity Exchange Act, giving the federal framework clear authority. Regulatory clarity like this is exactly what legitimate markets need to grow and serve millions of users fairly.

CCN

Tarek Mansour on X

Narrative B

This ruling is off-base because prediction markets are sports gambling dressed up in financial jargon, and states are right to fight back. These platforms skip age verification, dodge taxes and fuel addiction while hiding behind CFTC loopholes never designed for gambling products. Letting unregulated betting expand nationwide without consumer protections is a public health disaster waiting to happen.

Akron Beacon Journal Editorial Board