Federal appeals court rules New Jersey can’t bar Kalshi users from sports event contracts, says CFTC has exclusive jurisdiction

What the court decided

A federal appeals court has ruled that New Jersey cannot stop residents from using Kalshi, a federally registered prediction market, to trade sports-related event contracts because the Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over those products. Short and to the point: the court found state regulation is preempted when the CFTC oversees an exchange offering event contracts. For Kalshi, which has fought to operate under federal oversight, this is a clear legal win.

The case in brief

New Jersey had sought to apply state law to block such sports-related contracts, arguing they fell within the state’s regulatory reach. The appeals panel disagreed, concluding the Commodity Exchange Act places authority with the CFTC and leaves states on the sidelines for these kinds of event contracts. The decision underscores the tension between state efforts to police gaming and wagering—and a federal framework that covers certain derivatives-like products.

Why it matters

What happens next matters beyond Kalshi. The ruling limits states’ ability to impose their own bans on prediction markets when the CFTC claims authority, potentially opening the door for other platforms to expand their offerings under federal regulation. It could also push states to change tactics — through lobbying, new legislation, or coordination with federal regulators — if they want to curb what they view as betting masquerading as markets.

Bigger picture

This is part of a broader legal and policy scramble over how to treat novel financial products that blur lines between gambling, betting and regulated derivatives. Remember the post-2018 sports-betting boom after the Supreme Court’s decision? This is the next chapter: who gets to draw the line, and at what level of government. For Kalshi, the appeals court’s ruling is vindication; for states, a reminder that federal preemption can be a powerful check.

Sources: reuters.com