In a significant victory for prediction market provider Kalshi, a federal appeals court has ruled that New Jersey cannot temporarily ban the company's operations. The Third Circuit Court of Appeals panel voted 2-1 in favor of Kalshi, stating that the company's products fall under the federal Commodity Exchange Act, rather than New Jersey's state gambling laws. The ruling emphasizes that Kalshi's sports-related event contracts are subject to federal law, and the Commodity Futures Trading Commission (CFTC) has not determined that these contracts are against the public interest.
The decision highlights the ongoing debate over the regulation of prediction markets, with states arguing that such platforms violate state gambling laws, while the CFTC contends that they are governed by federal law. This ruling may have implications for other prediction market providers, including Polymarket, which have faced similar lawsuits and cease-and-desist orders from states across the US.