Kalshi has won a landmark decision in the Third Circuit in New Jersey. Judges upheld the decision to grant the company a preliminary injunction in its lawsuit against the state’s gambling regulator.
While the ruling is not a definitive judgment on the legality of sports prediction markets, Dustin Gouker, a leading commentator on the industry, said it is “the biggest decision to date on the legality of prediction markets and whether federal law preempts state gaming law.”
Gouker broke the news in his newsletter, The Event Horizon, noting two of the three judges ruled in favor of Kalshi in the case.
In their decision, the judges wrote, “Kalshi was likely to succeed in showing that the (Commodity Exchange) Act preempts New Jersey law from reaching into Kalshi’s CFTC-licensed DCM to ban sports-related event contracts.”
History of Case
New Jersey was one of the first states to challenge Kalshi over its sports markets, issuing the company a cease-and-desist letter in April last year.
Kalshi responded by filing a lawsuit against the New Jersey Division of Gaming Enforcement (NJDGE) and Casino Control Commission.
A judge then granted Kalshi a preliminary injunction, blocking enforcement of the cease-and-desist order. New Jersey appealed the decision to the Third Circuit, but the judges upheld the original decision.
What Does it Mean for Sports Prediction Markets?
For the time being, the judgment means Kalshi can continue offering its sports markets in New Jersey. Kalshi is also likely to use the decision in other court battles across the country.
At the same time, judges in other states have issued rulings that Kalshi’s opponents are using to support their cases.
Like New Jersey, Nevada initially granted Kalshi an injunction, but later reversed its decision. The state is the only jurisdiction to successfully restrict Kalshi’s markets.
In a filing submitted to the court in New Jersey last week, Kalshi noted that the ruling in Nevada was issued without a hearing.
The company’s lawyers also said placing restrictions on federally regulated exchanges would result in “total chaos,” with platforms unable to provide impartial access to all eligible participants nationwide.
CFTC Backs Up Kalshi
The Commodity Futures Trading Commission (CFTC) filed an amicus brief in support of Kalshi and has also reiterated its stance that it has exclusive jurisdiction over event contracts.
The organization has further defended Kalshi and other platforms by filing lawsuits against state regulators in Arizona, Connecticut, and Illinois.
The ruling in New Jersey strengthens the CFTC’s and Kalshi’s case, but the fight is far from concluded. Gouker stated, “New Jersey could ask for an en banc rehearing in the Third Circuit, where all the judges in the circuit would listen to the case. It could also appeal to the US Supreme Court.”
The Supreme Court is likely to be where the legal status of sports prediction markets will be decided. Legal experts predict this will happen in the next few years, at the earliest, next year.
Like most things, you can trade on it at prediction market platforms. Polymarket currently gives a 60% chance that the Supreme Court will hear a case by the end of the year.
The post Kalshi Wins Landmark Ruling in New Jersey to Offer Sports Prediction Markets appeared first on CasinoBeats.
Kalshi has won a landmark decision in the Third Circuit in New Jersey. Judges upheld the decision to grant the company a preliminary injunction in its lawsuit against the state’s gambling regulator. While the ruling is not a definitive judgment on the legality of sports prediction markets, Dustin Gouker, a leading commentator on the industry,
The post Kalshi Wins Landmark Ruling in New Jersey to Offer Sports Prediction Markets appeared first on CasinoBeats.