New Jersey Court Rules CFTC Has Exclusive Jurisdiction Over Kalshi

The US Court of Appeals for the Third Circuit has ruled that the Commodity Futures Trading Commission holds exclusive jurisdiction over Kalshi’s sports-related event contracts, preventing New Jersey regulators from enforcing state gambling laws against the prediction market operator.

What the Court Decided

The ruling, issued on 6 April, determined that Kalshi’s event contracts qualify as swaps traded on a CFTC-licensed designated contract market (DCM). Under that classification, the Commodity Exchange Act grants the CFTC sole regulatory authority over those products, with no room for state-level intervention.

“Kalshi’s sports-related event contracts are swaps traded on a CFTC-licensed DCM, so the CFTC has exclusive jurisdiction,” the court stated.

The decision prohibits New Jersey’s Division of Gaming Enforcement from taking any action to prevent Kalshi from offering its prediction market products to eligible residents in the state.

How the Dispute Began

The case traces back to a cease-and-desist order New Jersey regulators issued against Kalshi in 2025. The state alleged that Kalshi’s sports event contracts breached New Jersey gambling law, specifically provisions that prohibit wagering on collegiate sports outcomes.

Kalshi responded by filing suit, arguing that its contracts are financial derivatives, not gambling products, and that only the CFTC has authority over them under federal law. The Third Circuit agreed.

Kalshi CEO Responds

Kalshi CEO Tarek Mansour framed the ruling in market access terms rather than legal technicality. In a LinkedIn post published after the decision, Mansour said the platform provides products that are “more fair, transparent and reward being right.” He added: “Free markets work. We should keep them that way.”

His public statement made no reference to the collegiate sports concerns at the centre of New Jersey’s original cease-and-desist, focusing instead on price discovery and the mechanics of prediction markets as financial infrastructure.

The Wider Legal Picture

The Third Circuit ruling does not resolve the broader jurisdictional dispute playing out across the US. On the same day the New Jersey decision was published, a Carson City District Court judge in Nevada issued an opposing ruling, prohibiting Kalshi from offering sporting event contracts in that state. Earlier, on 31 March, Washington State Attorney General Nick Brown filed suit against Kalshi, alleging the platform operated unlawful gambling products in the state.

The diverging outcomes at the state level are sharpening what legal analysts have described as a circuit split, with some federal courts backing CFTC preemption and others allowing state gaming enforcement to proceed. A Supreme Court intervention is widely anticipated to settle the question.

Kalshi and Polymarket also introduced new insider trading guidelines on 23 March, applying restrictions to politicians, athletes, and other parties with access to non-public information that could influence contract outcomes.

Separately, Polymarket confirmed it would cancel all open orders during a multi-week maintenance window to upgrade its trading engine, introduce enhanced smart contracts, and launch a new collateral token called Polymarket USD. The operator said it would give users at least one week’s notice before the cutover date.

The prediction markets sector’s legal status in the US remains unresolved market by market. The Third Circuit decision strengthens Kalshi’s federal preemption argument in one jurisdiction, but the simultaneous Nevada ruling illustrates how far the issue is from settled.

Source: US Court of Appeals for the Third Circuit

For more on the prediction markets regulatory battle, see our coverage of the Nevada court restraining order against Polymarket, Ohio’s denial of Kalshi’s injunction, and Nevada’s lawsuit against Coinbase over unlicensed betting.