Appeals Court Rules in Favor of Kalshi Against New Jersey Ban
- A Third Circuit Court of Appeals panel ruled in a 2-1 vote that New Jersey cannot enforce a ban on Kalshi, as its products fall under the federal Commodity Exchange Act.
- The ruling stated that Kalshi’s sports-related event contracts were self-certified and presumptively approved under federal law, with no current enforcement actions from the CFTC.
- New Jersey’s argument that Kalshi’s contracts are not ‘swaps’ was deemed to raise the bar beyond what the Commodity Exchange Act requires.
- The CFTC has maintained that prediction markets are swaps governed by federal law, which preempts state regulations.
- Divergent rulings have emerged across various courts, with some states issuing temporary restraining orders against prediction market providers like Kalshi and Polymarket.
This ruling highlights ongoing tensions between state laws and federal regulations regarding prediction markets, as various states pursue legal actions against platforms like Kalshi for alleged violations of gambling laws.
The Third Circuit’s decision reinforces the argument that the Commodity Exchange Act governs these markets, potentially impacting how similar cases are adjudicated across the U.S., especially given mixed outcomes in other jurisdictions.(Source)
