Kalshi wins preliminary injunction in New Jersey over sports event contracts

Prediction market operator Kalshi has secured a preliminary injunction from a federal court in New Jersey, allowing it to continue offering sports-related event contracts in the state despite regulatory opposition.

U.S. District Judge Edward S. Kiel granted Kalshi’s motion for a temporary restraining order and preliminary injunction against the New Jersey Division of Gaming Enforcement (DGE), which had issued the company a cease-and-desist order in March. The DGE alleged Kalshi was operating unauthorized sports betting in violation of state law.

Kalshi contends that its markets, which allow users to trade on outcomes of events such as sports games, are federally regulated financial products and fall under the exclusive jurisdiction of the U.S. Commodity Futures Trading Commission (CFTC), not state gambling regulators.

“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,” Judge Kiel wrote in his decision. “Defendants argue that sporting events are without potential financial, economic, or commercial consequence. On the record before me, I disagree.”

Kalshi has filed similar lawsuits in Nevada and Maryland following regulatory attempts to restrict its operations. The New Jersey decision mirrors a ruling in Kalshi’s favor by U.S. District Chief Judge Andrew P. Gordon in Nevada, further reinforcing the company's position that such contracts are federally sanctioned.

Kiel noted that Kalshi’s contracts are effectively permitted by the CFTC’s oversight. “At this stage, Kalshi’s sports-related event contracts evidence – by their very existence – the CFTC’s exercise of its discretion and implicit decision to permit them,” he added.

Kalshi, which is registered as a Designated Contract Market, allows users to trade on a wide range of outcomes, including whether a specific person will become the next pope or if a public figure fight will occur. The company continues to operate in all 50 states, including those that do not permit traditional sports betting.

The CFTC, which had planned a roundtable discussion on the regulatory treatment of sports prediction markets, recently canceled the event, citing plans for a broader series of panels. The agency has not commented publicly on the rescheduling.

“Kalshi is regulated as a Designated Control Market... regulated by the CFTC — an independent agency of the US Government that has regulated US derivatives markets since 1974 and is overseen by Congress,” the company states on its website.