TLDR The US Third Circuit Court of Appeals ruled 2-1 in favor of Kalshi, blocking New Jersey from enforcing state gambling laws against the prediction market platform Judge Roth’s dissent argued Congress never intended the CFTC to override state gambling regulations when it amended the Commodity Exchange Act in 2010 Industry figures are split on whether the ruling could threaten state-regulated gambling operations across the country The ruling is a preliminary injunction and only found a “reasonable likelihood of success,” not a final decision Legal experts say the case is likely headed to the Supreme Court, with New Jersey having 14 days to request an en banc hearing
A federal appeals court has sided with prediction market platform Kalshi in a closely watched legal battle over whether federal regulations can override state gambling laws.
The US Third Circuit Court of Appeals ruled 2-1 to uphold a preliminary injunction that stops New Jersey from enforcing its state gambling laws against Kalshi.
The decision marks the biggest legal win yet for the company in its ongoing fight with state regulators.
Judge Roth’s Dissent Raises Federal vs. State Concerns
However, the ruling was not unanimous. Judge Jane Richards Roth issued a sharp dissent arguing that Congress never meant for the Commodity Futures Trading Commission to step on states’ rights to regulate gambling.
Roth pointed to an exchange in the congressional record between senators Dianne Feinstein and Blanche Lincoln. During that exchange, Lincoln said Congress expected the CFTC to block contracts that were “contrary to the public interest” and existed mainly to allow gambling.
Lincoln specifically mentioned contracts tied to the Super Bowl, the Kentucky Derby, and the Masters Golf Tournament as examples of contracts that “would not serve any real commercial purpose.”
Roth also argued that Kalshi’s broad definition of