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A three-judge panel of the Third Circuit upheld a preliminary injunction for the Kalshi exchange against enforcement by the state of New Jersey over sports-related event contracts, becoming the first federal ruling on prediction markets like Kalshi and Polymarket
In a 2-1 ruling, the panel upheld an injunction for Kalshi granted by the New Jersey district court, ruling that New Jersey’s state gambling laws directly interfere with swaps transactions offered by Kalshi in violation of the CFTC’s exclusive jurisdiction (KalshiEx LLC v. Flaherty, No. 25-1922 (3d Cir. Apr. 6, 2026)).
The ruling means that New Jersey may not proceed with its enforcement action against Kalshi over trading of sports-related contracts.
The panel found that the event contracts are swaps traded on a CFTC-licensed designated contract market (DCM).
The panel agreed with the district court that Kalshi demonstrated a likelihood of success on its argument that the Commodity Exchange Act (CEA) preempts New Jersey law from reaching into CFTC-licensed DCMs.
The CFTC is headed by President Donald Trump appointee Michael Selig, who vows to support prediction markets in their respective efforts to operate in all 50 states. Selig referred to these platforms as "exciting products."
According to gaming attorney Daniel Wallach, New Jersey has 14 days to request rehearing en banc before the CA3's 14 active judges. Limited to 2 grounds: 1) maintain uniformity with circuit precedent; or 2) "involves question of exceptional importance." While rarely granted, split ruling gives it a chance (see Christie II).
- Aaron Goldstein, Gambling911.com
