Kalshi Scores Early Legal Victory Against New Jersey Gaming Regulators

An appellate court recently heard arguments regarding the regulatory jurisdiction of gaming contracts offered by Kalshi in New Jersey. Although a ruling has not been announced, Kalshi seemed to win the panel’s favor in the early going.

Legal Drama

In March, the New Jersey Division of Gaming Enforcement (NJDGE) issued a cease-and-desist order to the prediction market platform Kalshi, prohibiting it from offering sports event contracts in the Garden State. New Jersey was one of several states to do so, as the regulators believed it violated their gaming rules, considering Kalshi did not have a license or permission to offer betting contracts in the state.

However, Kalshi countered that it was governed under federal law by the Commodities and Futures Exchange Commission (CFTC). Kalshi then sued and was subsequently granted an injunction, which allowed it to continue operating in New Jersey as it had done throughout the United States, much to the chagrin of state regulators, mobile sportsbooks, and even gaming tribal nations.

The sparring duo was back in court last week as the Third Circuit Court of Appeals heard arguments over regulatory jurisdiction. Kalshi had previously won several legal battles with only a minor setback in a Maryland state court several weeks ago.

Kalshi Poised to Set Legal Precedent

Based on the line of questioning by the three-judge panel, it appeared as though the state’s attorneys were unable to conclusively convince the judges that Kalshi’s CFTC-regulated swaps should be limited to strictly financial events.

Judge David Porter noted, “That’s not in the statute.” Although historically, trading platforms like Kalshi dealt in commodities like gold and silver, with customers taking contracts out and speculating on the price increase or decrease of these goods as well as many others, Kalshi began to offer contracts on political races, something US sportsbooks are not allowed to do.

The company then began to veer in the direction of sports event contracts for the 2025 Super Bowl. Since that time, Kalshi has been under attack by sports betting stakeholders and has had to defend itself from a blizzard of injunctions and legal issues.

The legal battles are far from over, but should Kalshi prevail in New Jersey, it could set the legal standard in other markets, which would be a boon to Kalshi and its competitors in the sports event contract arena.

Polymarket’s U.S. Resurrection

Polymarket is a CFTC futures trading platform like Kalshi. However, unlike its competitor, it withdrew from the U.S. market after the CFTC sued it in 2022, and the company ultimately settled the lawsuit.

Still, with Kalshi’s recent legal victories, Polymarket is prepared to reenter the US market after it acquired the CFTC-approved QCX.

This signaled that Polymarket was returning to the U.S. futures trading market and would likely be offering sports event contracts as well. The addition of Donald Trump Jr. to its advisory board provides a towering political figure to its brand.

The company said Trump Jr.’s arrival brings “decades of experience in forward-thinking business innovation and strategic perspective.” Ironically, Trump Jr. also serves as a strategic advisor to rival firm Kalshi. Polymarket is expected to launch operations through QCX imminently.