Kalshi secured a significant legal victory after the U.S. Court of Appeals for the Third Circuit ruled 2–1 to uphold an injunction blocking New Jersey from enforcing its gambling laws against the prediction market platform.
The decision marks the first time a federal appellate court has ruled on whether state sports betting laws apply to prediction markets, and comes days after Kalshi suffered a setback in Nevada, underscoring growing legal divergence across jurisdictions that could ultimately require resolution by the U.S. Supreme Court.
At the heart of the case were two key questions: whether the federal Commodity Exchange Act (CEA) preempts state gambling laws, and whether Kalshi’s contracts qualify as “swaps” under the statute. Kalshi needed to prevail on both issues to succeed.
Writing for the majority, Judge David J. Porter said the federal law overrides state regulation in this context. “The District Court considered whether the Act impliedly preempted state regulation of DCMs and concluded that ‘at the very least field preemption applies,’” he wrote.
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