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New Jersey Cannot Regulate Kalshi's Prediction Market, US Appeals Court Rules (reuters.com) 83

Posted by BeauHD from the not-so-fast dept.
An anonymous reader quotes a report from Reuters: A federal appeals court ruled on Monday that New Jersey gaming regulators cannot prevent Kalshi from allowing people in the state to use its prediction market to place financial bets on the outcome of sporting events. A three-judge panel of the Philadelphia-based 3rd U.S. Circuit Court of Appeals ruled 2-1 (PDF) in finding that the U.S. Commodity Futures Trading Commission has exclusive jurisdiction over the sports-related event contracts that Kalshi allows people to trade on its platform. The ruling marked the first time a federal appeals court has ruled on what has become the central issue in an escalating battle over the ability of state gaming regulators to police the activity of prediction market operators.

Kalshi and companies like it allow users to place trades and profit from predictions on events such as sports and elections. States argue that firms like Kalshi are operating without required state licenses, in violation of gaming laws, including bans on wagers by those under 21. Those states include New Jersey, which last year sent Kalshi a cease-and-desist letter stating that its listing of sports-related event contracts on its platform violated state gambling laws that prohibit betting on collegiate sports. Kalshi sued the state, arguing its event contracts qualify as "swaps," a type of derivative contract, that under the Commodity Exchange Act can only be regulated by the CFTC, which had granted the company a license to operate a designated contract market (DCM).

A lower-court judge had sided with New York-based Kalshi and issued a preliminary injunction, prompting New Jersey to appeal. But a majority of the judges on the 3rd Circuit panel concluded the Commodity Exchange Act likely preempted state law. "Kalshi's sports-related event contracts are swaps traded on a CFTC-licensed DCM, so the CFTC has exclusive jurisdiction," U.S. Circuit Judge David Porter wrote. The ruling was in line with the position advanced in other litigation by the CFTC under President Donald Trump's administration. The regulator last week sued Arizona, Connecticut and Illinois to prevent them from pursuing what it called unlawful efforts to regulate prediction markets.

New Jersey Cannot Regulate Kalshi's Prediction Market, US Appeals Court Rules More | Reply

New Jersey Cannot Regulate Kalshi's Prediction Market, US Appeals Court Rules

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  • So much for the rule of law (Score:5, Insightful)

    by rsilvergun ( 571051 ) on Monday April 06, 2026 @11:56PM (#66080798)
    There is absolutely no commodity here or anything approaching something regulated by futures trading. This is obviously just gambling.

    These gambling businesses are draining about 60 billion a year mostly from Young men. There will be long-term social consequences and if you're not really old and about to die you will experience them. Like it or not you and I all live in the same society.

    • Re:So much for the rule of law (Score:4, Funny)

      by outsider007 ( 115534 ) on Tuesday April 07, 2026 @01:16AM (#66080868)

      There will be long-term social consequences and if you're not really old and about to die you will experience them.

      Sure, but the question is when. I've got $200 on before Jan 2028.

      • You can already see some cracks (Score:5, Insightful)

        by rsilvergun ( 571051 ) on Tuesday April 07, 2026 @10:04AM (#66081282)
        The fact that we invaded Iran because the senile old man didn't understand that they would and could close the strait of Hormuz is huge.

        Unless Trump backs down in the next week or so we are going to have massive food shortages. That will drive up the cost of everything everywhere as everyone competes for a shrinking food supply. This is because so much of the fertilizer goes through the straight and we are in the planting season and we need to get going and we can't.

        One of the problems with this country is people aren't very bright. They can't extrapolate even simple things. The majority of Americans seem to think at about the level of a 12-year-old. So they can't figure out the difference between news and propaganda and they can't understand that just because they could afford to eat this week doesn't mean they can afford to eat next week.

        On top of that you've got a good chunk of people who are over that edge already and when you are struggling for your next meal it's hard to think clearly. So even if you somehow made it over the hump of thinking like a 12-year-old a few years of poverty and the stress that comes with it will knock you right back down.

        Which is exactly why the Epstein class keeps so many people in that state. Idle hands are The devil's plaything after all...
    • Gambling and prostitution - oldest professions in the word. Many governments have tried to stop them and all failed miserably despite resources committed. If it has been proven that it cannot be stopped, is it worth spending the taxpayer's money in futile attempts? Human nature, however flawed, cannot be denied, so one sensible alternative is to to regulate it and tax it like any other business. At least prevent people from being taken advantage of by dishonest players, have some control over it as far as n
      • You are regulating them. That's why we have Las vegas. Dumbass young men can travel to Las Vegas and lose their short once or twice and then they have that barrier between themselves and their addiction. It also means it's much easier to regulate, serious addicts for example used to be able to contact all the casinos in Vegas and get put on a list and they would not be allowed to gamble anymore.

        The problem with gambling is that it is legitimately and clinically addictive. Prostitution is a problem but a

        • Have you ever heard of a bookie? If you're young, likely not. They don't have much business anymore due to online gaming. But back when Vegas and Atlantic City (and scattered Indian reservations) were the only places with legal casinos, every town of any size had illegal gambling going on, often in the backroom or basement of some shady bar.

          Gambling addicts never had a hard time finding a place to cater to their addiction. But outlawing gambling, or even regulating it sharply, just puts more of it into the

      • Re: (Score:1)

        by Anonymous Coward

        But prostitution you at least get an instant return on your investment. Gambling doesn't guarantee any wins, ever.

    • Indeed, the American judge issuing the ruling definitely has no clue what a "swap" is.

      • Re: (Score:2, Insightful)

        by rsilvergun ( 571051 )
        Oh God is stupid as he is I can't imagine he doesn't know that. If anything it would have been very very carefully explained to him by the other lawyers.

        he's just corrupt. The Republican party has put a shitload of corrupt judges on the bench so that they could get them to rule in favor of large businesses and corporations against consumers and employees. Justice beer bro and that one girl that couldn't answer high School civics questions during her Senate hearing are probably the most famous examples bu

        • Re: (Score:3, Funny)

          by cayenne8 ( 626475 )

          Clarence Thomas is another great example, George Bush was angry he was going to have to nominate a black man because he was as you might imagine kind of racist so he picked the most incompetent and corrupt black man he could find and rammed him through the Senate.

          I think Judge C has had some of the most brilliant legal reasonings in the past century...thank God for him on the court.

          I rate him second only to Scalia....

    • Re: (Score:2)

      by SumDog ( 466607 )
      > There is absolutely no commodity here or anything approaching something regulated by futures trading. This is obviously just gambling.

      To be fair, the stock market, day trading and futures trading are all also forms of gambling.

      • To be a simpleton, everything is the same.

        With a UID like that, I can't call you a millennial; which is a demographic loaded of simpletons, or the many I ran into were 10 years ago compared with the previous groups. The gen I see now are just stupid; but trying more.

        • Re: (Score:2)

          by SumDog ( 466607 )
          Generational titles are always meant to be derogatory and never to uplift. You never year, "those amazing boomers." You also don't attack my argument, you ad hominem attack me (via my generation, UID or whatever) without addressing the argument. You seem to be a simpleton yourself as you can't argue and make silly reductionist statements without offering any real insight of value.

    • No, the judges looked at the laws and determined that the activity is under Federal jurisdiction.

      Since you are unhappy the thing to do is get the law changed to exclude prediction markets from the laws regulating futures contracts.

      I happen to agree with you by the way. The Commerce Clause was way over extended back in the days of FDR. If there is no physical product crossing the border it should be under the State's jurisdiction. The prediction markets do not want to set up 50 different companies so want to

    • Re: So much for the rule of law (Score:4, Insightful)

      by OrangeTide ( 124937 ) on Tuesday April 07, 2026 @10:15AM (#66081294) Homepage Journal

      The hope of those that pull the strings of our government is that young men saddled with debt will fight our wars.

    • Re: (Score:3)

      by 3vi1 ( 544505 )

      Absolutely correct. I'm shocked judges and regulators have let this nonsense persist this long. The "market"s arguments are pure and obvious sophistry.

  • It's not just the addicted gambler who loses everything. It's also the employees of the companies that shut down thanks to embezzlement and theft.

    • Re:Gambling ruins lots of lives (Score:5, Insightful)

      by Tailhook ( 98486 ) on Tuesday April 07, 2026 @01:17AM (#66080870)

      It's also the employees of the companies that shut down thanks to embezzlement and theft.

      Structuring your nation's laws around the longevity of companies is a terrible idea. Most companies should fail, because most companies are bullshit created by ambitious idiots and/or scofflaws and deserve failure. Most companies that have ever existed are gone today. And that's fine. That's healthy.

      • The fuck? Most people work for companies.
      • But that has nothing to do with the point the op made.

        Preventing criminals from destroying private businesses isn't "structuring laws around business longevity". If you want that the complete lack of antitrust law enforcement would be a better example.

        Private businesses are part of the overall infrastructure that makes your society work. So yeah when there is a attack on necessary infrastructure you do something about it or your civilization collapses.

        I really hope you're at least getting paid to

        • Re: (Score:2)

          by Tailhook ( 98486 )

          Hah! rsilvergun saying stuff that isn't commie pabulum.

          If you weren't so simple you'd know that my view is pro-business. But that would involve not mindlessly obeying your training.

    • Re: (Score:3)

      by DarkOx ( 621550 )

      Don't forget the children that don't eat, or miss out on a lot of opportunities because dad spend the money on whatever his version of a horse race happens to be.

      I gambling should be restricted to private in person bets, between parties and it should be illegal to profit directly from any sort of book making or facilitation of gambling activities.

      So if you and buddy you invited over to watch the game want to bet on the outcome with each other - legal

      If you and some friends go the saloon/moose lodge and have

  • For gambling: Michael Arthur Chagares - GWB, David James Porter - Trump Dissenting: Jane Richards Roth - GHWB Previous court that ruled against gambling: Judge Edward S. Kiel - Biden

  • You know, looking at the definition, I could probably make the argument that a pull on a slot machine is a "swap" per the definitions as long as the casino operator jumped through the hoops to get declared a DCM.

    • You know, looking at the definition, I could probably make the argument that a pull on a slot machine is a "swap" per the definitions as long as the casino operator jumped through the hoops to get declared a DCM.

      I'd say a slot machine is a pay per rep piece of fitness equipment. No expensive gym membership needed for a workout It also has a randomized reward system to help people maintain interest in their workouts.. :-)

    • I believe that was precisely the point of the dissenting judge.

      • Thinking further, it seems like it'd be impossible to separate things because commodities future trading is in fact a kind of gambling. When you buy a futures contract, you're betting that the price of the commodity will go above the contract price. The seller is betting it won't. The only difference is what you get if you win the bet. dollars or eg. corn. Once you allow intangibles in, even that distinction disappears. The dissent has a point, but I think the majority is correct as to the law and if people

    • Right... and meth is just a really effective weight loss medication!
  • Let's take a big step back. Before anyone has a say in what's done there, let's stop the abuse of the interstate commerce clause. Local jurisdiction is local, and the excuse that down the road money will change hands in an unrelated transaction because of this one is the worst abuse of the constitution out there.
    • The federal government reserves the right to punish people for pot grown and sold in states where it is legal to do so on the legal theory that some of it _could_ potentially be moved to another state, therefore it's interstate commerce!
  • The courts have decided gambling must be legal? Is the Antichrist running things already?

  • One very interesting point by the dissenting judge is that if you accept the majority's broad interpretation of swaps, then not only are prediction markets swaps, but normal gambling is as well. Therefore all currently legal and regulated gambling is actually illegal because the CFTC has exclusive jurisdiction, not the states, and none of these gambling operations are following CFTC rules.

  • They could pass a law in the state requiring a 90 percent tax on prediction market earnings. Winning IS income.

  • Kalshi is only a thing because Draft Kings and Fan Duel have been so successful. Those two companies are as powerful as they are because New Jersey fought to strike down the federal law prohibiting the gambling on amateur sports in 2018 (Murphy v. National Collegiate Athletic Association).

    Oh, how the wheel of 100% predictable consequences continues to turn...

  • It's gambling, just like the stock market. More evidence why all gambling should simply be legal, in the so-called Land of the Free.

  • There are legitimate uses for futures markets to hedge bets. Lets say you want to guarantee your price of oil next week, you buy that oil with a contract with a set price now because you are expecting it to go down. You are predicting that by executing a contract now that the future price of oil will drop and make you money but will lose money if it actually went up. These prediction markets are doing the exact same thing. Lets say your business is a hot dog stand outside of a stadium and if the team wins

  • Due to the Supremacy Clause, the Federal regulations override the State regulations. Once the CFTC stepped in and said "We are regulating this now", the states lost the ability to regulate.

    The proper course is to challenge the CFTC regulation. Either in court, or via an act of Congress (yeah...) There is evidence that the CFTC action overstepped its statutory authority in granting a trading license to a market that allows the activities that these prediction markets allow. Make that argument in court.

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