This decision by the U.S. Court of Appeals for the Third Circuit came in a case in which prediction market Kalshi sued New Jersey after the state sent the company a cease and desist letter saying that sports-related event contracts violate its gambling laws, according to the report.
In its lawsuit, Kalshi argued that its event contracts can only be regulated by the CFTC, per the report.
A lower court judge sided with Kalshi and issued a preliminary injunction, at which point New Jersey appealed.
While a majority of the three-judge appeal court panel concluded that the CFTC has exclusive jurisdiction, one judge dissented, saying Kalshi’s products are “virtually indistinguishable” from betting products offered by online sportsbooks.
New Jersey Attorney General Jennifer Davenport said her office is evaluating its options, according to the report. Davenport told Reuters that the appeals court’s ruling will allow “certain companies to offer sports gambling in our states without following the careful gaming rules that everyone else follows.”
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Kalshi CEO Tarek Mansour said in a Monday post on X that the Third Circuit’s ruling is “a big win for the industry and millions of users.”
“People use prediction markets because they’re more fair, transparent, and reward being right,” Mansour said. “Free markets work. We should keep them that way.”
PYMNTS reported in December 2025 that prediction markets are the latest flash point between federal and state regulators. While real-money prediction markets technically likely fall under the jurisdiction of the CFTC, a growing number of states have sought to shut down the markets they view as unlicensed or illegal gambling operations.
On Thursday (April 2), the CFTC filed separate lawsuits against Arizona, Connecticut and Illinois, saying the states have taken actions that intrude on the regulator’s exclusive jurisdiction to regulate prediction markets.
The CFTC is seeking a declaration that its exclusive jurisdiction preempts state laws applied to its regulated event contracts, as well as a permanent injunction prohibiting states from using state gambling laws to interfere with CFTC-regulated event contract activity.
