Kalshi scores appeals court win in battle over state crackdown on sports contracts

The ruling strengthens Kalshi’s claim that sports event contracts fall under CFTC oversight, even as other states keep challenging the company.

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Add us on Google by Estefano Gomez Apr. 6, 2026

Kalshi won a major appeals court victory on Monday after the U.S. Court of Appeals for the Third Circuit upheld a preliminary injunction blocking New Jersey from enforcing state gambling laws against the company’s sports-related event contracts.

The panel said Kalshi showed a reasonable chance of success on its argument that the Commodity Exchange Act preempts New Jersey’s attempt to shut those markets down. The ruling keeps in place an earlier district court order from April 28, 2025 that had already barred the state from moving forward while the case plays out.

The case began after New Jersey sent Kalshi a cease and desist letter in 2025, arguing that the company’s contracts amounted to unauthorized sports wagering under state law. Kalshi sued, saying its products are federally regulated derivatives listed on a CFTC-licensed designated contract market, not traditional sports bets subject to state gaming enforcement. The Third Circuit agreed that, at least at this stage, the narrower question is whether a state can regulate trading on a federally supervised market.

In the opinion, the court said Kalshi’s sports-related event contracts likely fit the Act’s definition of swaps because they depend on event outcomes associated with potential financial, economic, or commercial consequences. Since those contracts are traded on a CFTC-licensed platform, the court said they likely fall within the agency’s exclusive jurisdiction. It also said New Jersey’s threatened enforcement exposed Kalshi to irreparable harm, including business and reputational damage.

The ruling matters beyond New Jersey because it gives Kalshi its clearest appellate win yet in a fast-growing national fight over prediction markets. Reuters reported that courts in other states have not lined up the same way, with Kalshi losing in places such as Nevada, Maryland, and Ohio while winning in Tennessee. Just days before the Third Circuit decision, a Nevada judge extended a ban on Kalshi operating in that state and rejected the company’s argument that its contracts fall solely under federal oversight.

The Third Circuit noted that the CFTC has authority to review event contracts involving gaming if it finds them contrary to the public interest, but the agency has not prohibited the sports contracts at issue here. In March 2026, the CFTC opened an advance notice of proposed rulemaking on prediction markets, seeking comment on which kinds of event contracts may be barred.

Disclosure: This article was edited by Estefano Gomez. For more information on how we create and review content, see our Editorial Policy.