Kalshi secures landmark legal victory in New Jersey

Court says federal law applies

The ruling came on Monday after months of legal tension between both sides. Judges said Kalshi’s contracts fall under federal law, not state gambling rules.

Two judges agreed with Kalshi — and backed its main argument. They said these contracts work like financial products, not simple sports bets. Because of this, control sits with the Commodity Futures Trading Commission.

How the dispute began

The conflict started in March 2025, when New Jersey sent a cease-and-desist order. Regulators claimed Kalshi was offering sports betting without a license.

In April, a lower court sided with Kalshi — stopping state action for now. New Jersey then appealed the decision, pushing the case higher.

Judges split over the meaning of the contracts

The decision was not fully united — one judge disagreed with the outcome. She argued the contracts look and act like sports bets. In her view, states should still have the right to regulate them.

However, the majority focused on how the contracts are built and used. They said the structure fits financial markets more than gambling.

Similar fights are happening in other states

This case is part of a wider legal battle across the country. The Commodity Futures Trading Commission has also taken action against several states, including:

• Arizona

• Connecticut

• Illinois

Each of these states has tried to limit prediction market companies. In March, Arizona took a stronger step — filing criminal charges against Kalshi. That move raised the pressure on both sides.

Reactions show a growing divide

Kalshi welcomed the ruling and called it a major step forward. Co-founder Tarek Mansour said it was a big win for the industry. New Jersey officials took a different view — and strongly disagreed with the court.

They warned that such rulings may weaken state gaming rules. The state may still look at other legal options.

What comes next

This ruling is one of the first of its kind at this level. It may shape how courts see prediction markets in future cases. Beyond this, lawmakers may step in as the sector keeps growing. For now, Kalshi has the upper hand — but the wider legal fight is far from over.