Kalshi clinches legal win in New Jersey case as states fight to restrict prediction markets

Kalshi scored a win in the first ruling among a sweep of lawsuits from US states seeking to restrict prediction markets, as a federal appeals court rejected New Jersey’s attempts to ban sports bets on the platform.In a 2-1 decision on Monday, a panel of judges on the Philadelphia-based 3rd US Circuit Court of Appeals ruled that the US Commodity Futures Trading Commission, or CFTC, has exclusive authority over prediction markets like Kalshi and Polymarket – not state regulators.“This is a big win for the industry and millions of users,” Kalshi CEO Tarek Mansour wrote in a Monday morning post on X cheering the decision.States have argued that the new crop of prediction markets – which allow users to bet on everything from sports and pop culture to politics – are the same as online gambling platforms, which require state licenses and ban users under 21.Arizona, Connecticut and Illinois are currently entangled in a similar legal battle to New Jersey’s with the federal government.Last week, the CFTC sued the three states, challenging their attempts to regulate prediction markets.New Jersey last year sent Kalshi a cease-and-desist letter for operating sports-related “contracts” — the term prediction markets use to describe how transactions are made — that it said violated state gambling laws.

Kalshi responded by suing the state, arguing that its event contracts are “swaps” – a type of derivative contract regulated by the CFTC – and not bets.In Monday’s court decision, US Circuit Judge David Porter wrote that Kalshi’s sports-related contracts “are swaps” in fact, so they are under the exclusive jurisdiction of the CFTC.“Congress gave the CFTC exclusive jurisdiction over trades on DCMs, and this decision affirms the goals of ‌Congress,” a commission spokesperson told The Post.Christopher Gerlacher, a prediction market expert at Prediction News, said Kalshi was well-positioned for a win in the New Jersey case – though he added t...