dailyloe.com – A federal appeals court ruled Monday that New Jersey cannot regulate Kalshi’s prediction market for sports outcomes. The decision states the Commodity Futures Trading Commission holds exclusive jurisdiction. This ruling is a major legal victory for the prediction market industry.
A three-judge panel of the 3rd U.S. Circuit Court of Appeals ruled 2-1 in favor of Kalshi. The court found Kalshi’s sports-related event contracts fall under federal oversight. New Jersey had argued the platform violated state gambling laws.
Kalshi CEO Tarek Mansour called the decision a big win for the industry. He made the statement in a social media post on platform X. The ruling is the first federal appeals court decision on this core regulatory issue.
Kalshi allows users to trade contracts based on event outcomes like sports. States argued such firms operate without required state licenses. They claimed this violates laws including bans on wagers by minors.
New Jersey sent Kalshi a cease-and-desist letter last year. It stated the platform’s sports contracts violated state gambling prohibitions. The state specifically cited bans on betting on collegiate sports events.
Kalshi subsequently sued the state of New Jersey. The company argued its contracts qualify as swaps under federal law. These are derivative contracts regulated solely by the CFTC.
The CFTC had previously granted Kalshi a license to operate. This license designates it as a contract market under federal rules. The court’s decision reinforces this federal regulatory framework.
The legal battle highlights escalating conflicts over prediction markets. State regulators seek to police these operators under gaming laws. Federal law currently provides a shield for licensed platforms like Kalshi.[]
Source: Yahoo Finance
