Appeals Court Affirms CFTC Jurisdiction Over Kalshi Sports Contracts

A federal appeals court ruled Monday that New Jersey cannot enforce its gambling laws against the prediction market platform Kalshi, affirming that the U.S. Commodity Futures Trading Commission holds exclusive jurisdiction over the company's sports-related event contracts.

The U.S. Court of Appeals for the Third Circuit, based in Philadelphia, issued a 2-1 decision upholding a lower court's preliminary injunction that blocked state regulators from acting against Kalshi. The majority opinion, written by Circuit Judge David J. Porter, concluded that Kalshi's contracts qualify as swaps traded on a CFTC-licensed designated contract market, preempting state oversight under the Commodity Exchange Act. "Kalshi's sports-related event contracts are swaps traded on a CFTC-licensed DCM, so the CFTC has exclusive jurisdiction," Porter wrote.

The dispute arose last year when New Jersey's Division of Gaming Enforcement sent Kalshi a cease-and-desist letter, claiming the platform's offerings on college and professional sports outcomes violated state gambling statutes, including prohibitions on collegiate wagering. Kalshi, a New York-based exchange that allows users to trade on event...