Prediction Markets in New Jersey: Where Kalshi Won on Preemption
New Jersey is barred from enforcing its gambling laws against Kalshi's sports event contracts. A federal judge issued that order in April 2025 and the Third Circuit affirmed it 2-1 on April 6, 2026, the first federal appellate ruling holding that the Commodity Exchange Act preempts state gambling law here. Kalshi's sports contracts trade normally in New Jersey.
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The order runs against the state, not the exchange
New Jersey’s Division of Gaming Enforcement sent Kalshi a cease-and-desist on March 27, 2025, captioned for unauthorized sports wagering and demanding the exchange stop serving state residents. Kalshi sued instead and won.
The operative order bars the New Jersey defendants from “pursuing civil or criminal enforcement actions against Kalshi concerning its sports-related event contracts.” It has never been stayed. Kalshi’s sports contracts have traded in New Jersey continuously since April 2025.
What the injunction covers and what it leaves alone
Three limits matter and are frequently collapsed in coverage.
The order reaches sports-related event contracts only. Every layer of the record is consistent on this: the state’s cease-and-desist invoked the Sports Wagering Act and the constitutional ban on collegiate sports betting, Kalshi moved only as to sports, and the Third Circuit framed the appeal the same way.
It protects Kalshi specifically. It is not an industry-wide ruling, and other operators litigated separately. Robinhood Derivatives filed its own suit against the same officials in August 2025.
And it is preliminary. The Third Circuit found a reasonable chance of success on the merits rather than deciding them. The district court case is administratively stayed pending the appellate track.
What the Third Circuit held
Judge David J. Porter wrote for the court, joined by Chief Judge Michael A. Chagares. The panel held that Kalshi’s sports-related event contracts are swaps under the Commodity Exchange Act because the outcome is associated with a potential financial consequence, and that the federal scheme therefore displaces state gambling enforcement as applied to them.
Judge Roth dissented. That dissent is the roadmap every state has cited since.
This remains the only federal court of appeals decision on the merits of the question. The Sixth Circuit hears the Ohio and Tennessee appeals on July 30, 2026, and a split there would sharpen the case for Supreme Court review considerably.
Where the Supreme Court track actually stands
New Jersey has not filed a certiorari petition. It has twice asked for more time. The state applied to Justice Alito on June 26, 2026 to extend its deadline, and applied again on July 22 to move that deadline from August 4 to September 3. As of July 27, 2026 the Supreme Court docket shows no ruling on the second application and no petition on file.
The application docket is No. 25A1465. There is no certiorari docket number, because there is no petition yet.
The federal rulemaking overhang
The CFTC has an open rulemaking that could reshape the ground underneath this litigation regardless of what New Jersey does. Its advance notice published at 91 Fed. Reg. 12516 on March 16, 2026, and comments closed April 30, 2026.
Litigation
KalshiEX LLC v. Flaherty, No. 1:25-cv-02152 (D.N.J.), Judge Edward S. Kiel. Complaint filed March 29, 2025. Preliminary injunction entered April 28, 2025. Administratively stayed pending appeal.
KalshiEX, LLC v. Flaherty, No. 25-1922 (3d Cir.), before Chagares, Porter and Roth. Argued September 10, 2025, decided April 6, 2026. Mandate issued April 28, 2026.
Flaherty v. KalshiEX, LLC, No. 25A1465 (U.S.), extension application before Justice Alito. Filed June 26, 2026.
Robinhood Derivatives, LLC v. Flaherty, No. 1:25-cv-14723 (D.N.J.), filed August 19, 2025.
Questions
Can I trade on Kalshi in New Jersey?
Yes. A federal injunction bars New Jersey from enforcing its gambling laws against Kalshi's sports event contracts, and that order has never been stayed. Non-sports contracts were never targeted by the state's cease-and-desist.
Did the Supreme Court agree to hear this case?
No. New Jersey has not filed a certiorari petition. It has twice sought more time from Justice Alito, most recently asking to move its deadline from August 4 to September 3, 2026. No ruling on that request appeared on the docket as of July 27, 2026.
Does the New Jersey ruling apply to other states?
It binds only the Third Circuit, which covers New Jersey, Pennsylvania, Delaware and the Virgin Islands, and it protects Kalshi specifically. Other circuits are not bound and the Sixth Circuit hears the same question on July 30, 2026.
Is this a final ruling?
No. It is a preliminary injunction. The Third Circuit found a reasonable chance of success on the merits rather than deciding them, and the district court case is administratively stayed.