In a significant decision, a federal appeals court has blocked New Jersey's attempt to temporarily ban Kalshi, a prediction market platform, from operating in the state. The Third Circuit Court of Appeals ruled that Kalshi's products fall under the federal Commodity Exchange Act, which supersedes state gambling laws. The court's majority opinion stated that Kalshi had self-certified its compliance with applicable laws and regulations, and that the Commodity Futures Trading Commission (CFTC) had not determined that Kalshi's sports-related event contracts were contrary to the public interest.
The ruling comes as states across the US have been filing lawsuits and issuing cease-and-desist orders against prediction market providers, including Kalshi, alleging that their sports-related contracts violate state gambling laws. The CFTC has argued that prediction markets are swaps governed by the Commodity Exchange Act, which preempts state rules.
The decision is a significant win for Kalshi, but the issue is far from resolved, with different courts issuing conflicting rulings and further appeals pending.