Kalshi Gains Victory In New Jersey as Preliminary Injunction is Affirmed

• U.S. Court of Appeals for the Third Circuit affirmed a motion granting Kalshi a temporary restraining order and preliminary injunction in New Jersey
• The court of appeals voted 2-1 to affirm the order
• Kalshi will be able to offer its sports event contracts in the Garden State throughout the course of its lawsuit

Kalshi today gained a key victory in New Jersey as the U.S. Court of Appeals for the Third Circuit affirmed a motion granting the prediction market company a temporary restraining order and preliminary injunction against the state.

The U.S. Court of Appeals for the Third Circuit voted 2-1 to affirm the 2025 temporary restraining order and preliminary injunction.

The ruling affirmed a United States District Court in New Jersey’s April 2025 motion to allow Kalshi to continue offering its prediction market contracts in New Jersey throughout the course of its lawsuit against the state.

Judges Vote to Affirm Order

U.S. District Court Chief Judge Michael A. Chagares and Circuit Judge David J. Porter voted to affirm the decision, while Circuit Judge Jane Richards Roth cast the lone dissenting vote.

Judge Porter, who summarized the opinions of himself and Chagares, reported Kalshi “met its burden for preliminary injunctive relief” and the Commodity Exchange Act preempts state laws that interfere with swaps traded on DCMs.

“Kalshi’s sports-related event contracts are swaps traded on a CFTC-licensed DCM, so the CFTC has exclusive jurisdiction. The District Court did not abuse its discretion by finding that Kalshi would more likely than not suffer irreparable harm absent the preliminary injunction and that the remaining preliminary injunction factors also weigh in favor of Kalshi,” Judge Porter noted in his decision.

Judge Roth, in her lone dissenting argument, pointed to the fact that she could go on Kalshi’s website and bet on whether she believed the Tampa Bay Buccaneers would win by more than 2.5 points, whether the two teams would collectively score 45 or more points, or whether former Buccaneers wide receiver Mike Evans would score a touchdown.

These offerings, she said, are virtually indistinguishable from products available on online sportsbooks such as FanDuel and DraftKings.

“While online sportsbooks are regulated by states such as New Jersey, Kalshi asserts that it is outside the bounds of state regulation because it does not offer gambling products. Instead, Kalshi contends its offered sports-event contracts are swaps, subject to the exclusive jurisdiction of the CFTC. The Majority agrees, holding that Kalshi’s registration as a DCM and branding of its wagers as sports-event contracts are acts of alchemy that transmute its products from sports gambling to futures trading. I see Kalshi’s actions as a performative sleight meant to obscure the reality that Kalshi’s products are sports gambling. Because Kalshi is facilitating gambling, it can be subjected to state regulation,” she wrote.

Kalshi May Continue in New Jersey…For Now

The U.S. Court of Appeals affirmed the decision April 2025 decision made by United State District Judge Edward S. Kiel. Kiel said it was his opinion the event contract markets fall under the exclusive jurisdiction of the CFTC.

“Finally, I am persuaded that Kalshi’s sports-related event contracts fall within the CFTC’s exclusive jurisdiction and am unconvinced by defendants’ arguments to the contrary. Defendants argue that sporting events are without potential financial, economic, or commercial consequence. On the record before me, I disagree,” he wrote.

Kalshi has asserted in it lawsuits in both New Jersey and Nevada that neither of the state regulatory bodies have the right to intrude on the government’s “exclusive” authority to regulate prediction markets.

Kiel noted in his initial decision that the special rule for event contracts “states that no agreement, contract, or transaction determined by the CFTC to be contrary to the public interest may be made available on a registered market.”