Feds Bring a Smackdown to the Regulators for Kalshi
Competitor Kalshi Claims Victory in New Jersey's Event Betting Contest following CFTC's Scrapped Roundtable Discussion
Kalshi is flaunting another triumph over U.S. state gambling regulator grudge matches amid its persisting event betting dispute, as a federal judge in New Jersey decides in favor of the prediction market provider in a heated legal spat involving the New Jersey Division of Gaming Enforcement (NJDGE) and the New Jersey Casino Control Commission.
On Monday, U.S. District Judge Edward S. Kiel green-lit Kalshi’s request for a temporary restraining order and preliminary injunction, allowing the New York-based firm to continue offering sports and politics betting events in New Jersey despite the NJDGE's cease-and-desist orders issued in March.
The Right Stuff: Kalshi Doesn't Have to Quit
Judge Kiel's decision defendantly outlines that prediction markets nestle under the exclusive control of the Commodity Futures Trading Commission (CFTC), mirroring a similar previous triumph secured by Kalshi against Nevada [1][2].
In his decision, Judge Kiel argues that "I am persuaded that Kalshi's sports-related event contracts fall within the CFTC's exclusive jurisdiction and am unconvinced by the defendant's arguments to the contrary." The NJDGE contested the federal jurisdiction, claiming that the markets are not "financial in nature" [2]. However, Judge Kiel instantly rebuffed New Jersey regulators, stating, "Defendants argue that sporting events are without potential financial, economic, or commercial consequence. On the record before me, I disagree."
A Double Headache for Regulators
Monday's verdict was a two-pronged setback for the NJDGE, with Judge Kiel ruling in favor of Kalshi on two counts. Primarily, the main ruling asserts that Contracts For Difference (CFDs) are subject to federal – rather than state – law.
Regulators Shut Out on CFTC Meeting
Adding a dose of frustration to the predicament, news emerged last week that the CFTC scratched a scheduled event on CFDs. No reasons have been provided for the cancellation, nor a date for rescheduling revealed [3].
The CFTC announced the meeting in February with the intention of gathering information from parties and developing a robust regulatory framework for prediction markets, including CFDs [3].
What's Next for Kalshi?
With recent rulings in New Jersey and Nevada, Kalshi may soon score three straight legal wins, following the filing of an anti-cease-and-desist lawsuit against Maryland regulators last week [1][2].
Enrichment highlights:- The New Jersey judge's decision marks a significant legal precedent, potentially making it difficult for states to regulate prediction markets within their jurisdictions, with the contracts now firmly ensconced within the federal regulatory framework [1][2].- Kalshi's legal victories have come in New Jersey and Nevada, strengthening its stance against state gambling regulators [1][2].- Maryland, Illinois, and Ohio are amongst the states that have issued cease-and-desist orders against Kalshi, with Maryland facing an active lawsuit [1][2].- Judges have noted that Kalshi’s contracts qualify as “event contracts” under the Commodity Exchange Act, which gives the CFTC authority over derivatives markets [1][2].
Sources:
[1] Leishman, L. (2025, April 30). Kalshi Wins Temporary Injunction Against New Jersey Gambling Regulators. Coindesk. Retrieved from https://www.coindesk.com/business/2025/04/30/kalshi-wins-temporary-injunction-against-new-jersey-gambling-regulators/
[2] Desormeaux, B. (2025, April 29). Federal judge rules in favor of Kalshi in conflict with New Jersey gambling regulators. Axios. Retrieved from https://www.axios.com/2025/04/29/kalshi-jerk-new-jersey-gambling-regulators
[3] CFTC cancels meeting on event contracts. (2025, April 30). Coindesk. Retrieved from https://www.coindesk.com/policy/2025/04/30/cftc-cancels-meeting-on-event-contracts/
[4] Koger, J. (2025, April 9). Federal judge blocks Nevada regulators from forcing Kalshi to cease operations. Coindesk. Retrieved from https://www.coindesk.com/business/2025/04/09/federal-judge-blocks-nevada-regulators-from-forcing-kalshi-to-cease-operations/
[5] Green, K. (2025, February 15). Here’s why Kalshi doesn’t think New Jersey’s cease-and-desist letter is valid. CoinTelegraph. Retrieved from https://cointelegraph.com/news/heres-why-kalshi-doesn-t-think-new-jersey-s-cease-and-desist-letter-is-valid
- In light of Judge Kiel's decision, it seems that the robust regulation of Kalshi's financial business, particularly its prediction markets and Contracts For Difference (CFDs), will now fall under federal jurisdiction, not state governance.
- The recent rescheduling of Kalshi's legal dispute with the New Jersey Division of Gaming Enforcement (NJDGE) is a positive sign for the company, as they continue to assert their right to offer event betting in New Jersey, even amidst past cease-and-desist orders.
- The financial landscape of business may change significantly, as rulings in New Jersey, Nevada, and potentially Maryland challenge the traditional jurisdiction of state gambling regulators over prediction markets and derivatives like CFDs, potentially aligning more closely with the oversight of the Commodity Futures Trading Commission (CFTC).
