Kalshi Legal Victories Continue in New Jersey With Preliminary Injunction

Posted on: April 28, 2025, 03:17h. 

Last updated on: April 28, 2025, 03:17h.

Devin O'Connor @CasinoorgDevinO Read More

Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

• Kalshi has secured a preliminary injunction against the New Jersey Division of Gaming Enforcement
• In March, the NJ DGE issued Kalshi a cease-and-desist order
• Kalshi is offering sports-related event contracts

Kalshi has secured yet another legal victory, this time coming in New Jersey’s federal court.

After the New Jersey Division of Gaming Enforcement in March sent Kalshi a cease-and-desist order on allegations that it was operating unauthorized sports betting, a violation of the New Jersey Constitution and New Jersey Sports Wagering Act, Kalshi filed a complaint against the DGE on claims that its market contracts involving sports outcomes fall under the regulatory scope of the Commodity Futures Trading Commission, the independent agency of the United States government that governs derivatives markets.

Kalshi filed a motion for a temporary restraining order and preliminary injunction from the DGE, which regulates most forms of legal gambling in New Jersey aside from the state-run lottery. In an opinion published today, U.S. District Judge Edward Kiel said Kalshi’s arguments that its prediction markets do not fall under the DGE’s authority have merit that warrant a preliminary injunction.  

Motions Granted

Kiel wrote that the CFTC, which continues to review prediction markets in hopes of fostering a “holistic regulatory framework” for the emerging online websites and apps like Kalshi, has the “exclusive jurisdiction” of sports-related event contracts.

The federal judge said the financial, economic, and commercial consequences of such sports-related derivative markets are in contrast to the DGE’s claims that the contracts are not financial instruments as traditionally defined and regulated by the CFTC. Kiel also cited the federal ruling in Nevada that concluded that states do not have “regulatory authority over CFTC-designated exchanges.”

I am persuaded that Kalshi’s sports-related event contracts fall within the CFTC’s exclusive jurisdiction and am unconvinced by defendants’ arguments to the contrary,” Kiel wrote. “Defendants argue that sporting events are without potential financial, economic, or commercial consequence. On the record before me, I disagree.”

The CFTC’s regulations on event contracts mandate that exchanges like Kalshi not offer contracts “contrary to the public interest,” or contracts involving politics, elections, terrorism, and war. Kiel said he believes Kalshi’s arguments identifying financial and reputational harms that the DGE cease-and-desist order would have brought the company justified a preliminary injunction. 

Sports Roundtable Canned 

The CFTC was to host a forum allowing interests in the sports prediction market space and sports betting industry to weigh in with their opinions on whether such derivatives markets run afoul of state gambling laws. However, the CFTC abruptly called off the event last week, with an official telling Sportico that a more comprehensive series on the matter will “include several panels.”

The CFTC has not issued a formal statement on canceling the sports prediction roundtable, nor has it commented publicly on its rescheduling.

Kalshi continues to offer its sports-related event contracts in all 50 states, including those that do not allow sports gambling. Kalshi says it’s legally allowed to offer such products.

Kalshi is regulated as a Designated Control Market, which is a financial exchange designated to trade futures, swaps, and/or options on commodities,” the Kalshi website says. “Kalshi is regulated by the CFTC — an independent agency of the US Government that has regulated US derivatives markets since 1974 and is overseen by Congress.”

Along with sports contracts, Kalshi last week created a contract on who will be named the next pope (Pietro Parolin favored at 26%). Other notable current markets include whether Elon Musk and Mark Zuckerberg will fight this year (Yes, 4% chance) and if Zyn will be banned in the US this year (5% chance).