Third Circuit Blocks New Jersey, Rules Kalshi Sports Markets Covered by Federal Law
Key Takeaways
- Federal Commodity Exchange Act preempts New Jersey gambling laws, blocking enforcement against Kalshi.
- New Jersey cannot shut down Kalshi's sports markets or enforce its cease-and-desist order.
- The Third Circuit upheld Kalshi's injunction, allowing ongoing operation in New Jersey.
Kalshi Wins
The Third Circuit ruled 2-1 that New Jersey cannot enforce state gambling laws against Kalshi due to federal preemption.
The court held Kalshi's self-certified contracts are presumptively approved because the CFTC has not acted against them.
This decision contrasts with a Nevada court that extended a ban on Kalshi, creating a split.
The ruling grants Kalshi a preliminary injunction to continue operating in New Jersey.
Court Reasoning
The court rejected New Jersey's argument that outcomes are not joined with a financial instrument.
Congress gave the CFTC exclusive jurisdiction over DCMs.
Allowing New Jersey to enforce gambling laws would undercut the federal framework.
Industry Impact
Kalshi CEO hailed the ruling as a big win for the industry and millions of users.
The decision clears the way for Kalshi to operate in New Jersey and New York.
Conflicting state rulings set up a likely Supreme Court showdown.
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