New Jersey Loses Bid to Shut Down Kalshi Sports Contracts After Federal Appeal – Legal Bitcoin News

Key Takeaways:

• A Third Circuit appeals court ruled 2-1 on April 6, 2026, that federal law blocks New Jersey from enforcing state gambling rules against Kalshi.
• The decision gives Kalshi federal preemption protection across New Jersey, where the platform reports over $1 billion in weekly trading volume.
• New Jersey may seek en banc or Supreme Court review, with at least 19 federal Kalshi lawsuits still pending nationwide.

Kalshi Scores Federal Court Win as Third Circuit Strikes Down New Jersey Cease-and-Desist

The U.S. Court of Appeals for the Third Circuit issued a 2-1 decision April 6, 2026, holding that the federal Commodity Exchange Act preempts New Jersey’s attempt to block Kalshi from offering sports-related event contracts to state residents. The ruling affirms a preliminary injunction a federal district court granted in April 2025, which blocked the New Jersey Division of Gaming Enforcement from enforcing a cease-and-desist order against the company.

Kalshi, founded in 2018 and certified by the U.S. Commodity Futures Trading Commission as a designated contract market in 2020, operates a prediction market platform where users trade contracts tied to real-world outcomes. Since early 2025, those offerings have included sporting events such as the Super Bowl, Stanley Cup, and NCAA tournaments. The company earns fees on trades rather than taking positions against users.

New Jersey’s Division of Gaming Enforcement sent Kalshi a cease-and-desist order in March 2025, arguing the platform’s sports contracts violated the New Jersey Sports Wagering Act. State officials raised concerns about wagers on collegiate sports and about users under 21 accessing the platform. Kalshi sued in federal court, claiming CFTC jurisdiction under the Supremacy Clause.

U.S. District Judge Edward S. Kiel sided with Kalshi on April 28, 2025, finding the company was likely to prevail because its event contracts fall within the CFTC’s exclusive authority. New Jersey appealed to the Third Circuit, which heard oral arguments Sept. 10, 2025.

The Third Circuit majority held that because Kalshi operates under federal oversight as a CFTC-regulated exchange, its event contracts are governed by federal commodities law. State gaming statutes cannot override that authority. The court’s decision shields Kalshi from the DGE’s enforcement actions in New Jersey.

The CFTC has filed separate lawsuits against Arizona, Connecticut, and Illinois over similar state attempts to regulate prediction market platforms. The Third Circuit ruling aligns with the federal agency’s position that these contracts belong under national financial market rules, not state gambling regimes.

District courts across the country have not reached uniform conclusions. Kalshi has won injunctive relief in New Jersey and Nevada. It has faced adverse rulings in Maryland, Massachusetts, and Ohio. Appeals are pending in the Third, Fourth, Ninth, and other federal circuits.

Legal observers have noted the split creates conditions for eventual Supreme Court review. The Third Circuit’s preemption ruling could carry weight in other pending appeals, though it binds only courts within the circuit.

Kalshi has publicly maintained its platform is legal in all 50 states. The company did not issue an immediate public comment following the April 6 decision. The New Jersey Attorney General’s office declined to comment in related coverage.

The ruling allows Kalshi to continue operating in New Jersey without state interference on sports contracts. Traditional sportsbooks, which pay licensing fees and state taxes, have raised concerns about competing with federally regulated platforms that operate outside those frameworks. Age verification and collegiate sports integrity remain open policy questions.

New Jersey can seek a rehearing before the full Third Circuit or petition the Supreme Court. Neither step would automatically pause the ruling’s effect. The company is involved in at least 19 federal lawsuits nationwide. Other competitors like Polymarket have their own cases. The outcome of those cases, along with any appeals court decisions in other circuits, will determine how far the federal preemption argument extends.