US Appeals Court Rules New Jersey Cannot Ban Kalshi Prediction Markets

The dispute between the Commodity Futures Trading Commission and prediction-market platform Kalshi stems from a Michigan court’s June 29, 2026, finding that Kalshi’s contracts allegedly constituted illegal gambling and its order to cancel completed trades. The case centers on a clash between federal regulatory authority and state law. The CFTC warned that canceling trades would seriously undermine market confidence and contractual certainty.

In the latest development, the CFTC said on July 14, 2026, U.S. Eastern Time that it had invoked emergency powers to stop Kalshi from proceeding with plans to cancel trades by Michigan users, ordering the platform to settle them under normal procedures. Meanwhile, the Michigan court extended its injunction against the platform’s sports-event contracts and ordered Kalshi to implement geofencing to block users in the state by August 12, 2026, or face daily fines.

Kalshi is a Commodity Futures Trading Commission-regulated designated contract market where users trade yes-or-no event contracts that settle at a maximum of $1. The New York State Gaming Commission argues that sports contracts constitute gambling subject to state law. The dispute centers on whether the federal Commodity Exchange Act preempts state enforcement and could also affect the platform’s cost of operating across state lines.

On July 7, 2026, U.S. District Judge Analisa Torres of the Southern District of New York denied Kalshi’s motion for a preliminary injunction. She found that the company had not sufficiently shown that federal law preempted New York’s gambling laws and that the associated compliance costs did not constitute irreparable harm. Kalshi filed a notice of appeal the same day, and the case entered the U.S. Court of Appeals for the Second Circuit on July 8 under docket number 26-1835.

Kalshi offers event contracts as a designated contract market regulated by the US Commodity Futures Trading Commission (CFTC). The central legal question is whether contracts allowing users to trade on outcomes are federally regulated derivatives or sports betting products subject to state oversight. The rulings will determine whether prediction markets can operate nationwide.

In early July 2026, Kalshi failed to secure a Nevada Supreme Court stay of an order blocking trading in the state, while a Michigan court issued a separate two-week temporary restraining order. The company also sued Ohio regulators and mounted a legal defense in Minnesota. North Carolina’s proposed budget would impose a 6% tax on related revenue, while Kalshi’s deadline to appeal in New Jersey was extended to August 4.

Kalshi is a prediction market regulated by the U.S. Commodity Futures Trading Commission that allows users to trade contracts on event outcomes. The company argues that its products are financial swaps, while Michigan considers its sports contracts to be unlicensed online gambling. The dispute centers on whether federal financial regulation can preempt state gambling laws and also raises questions about consumer protection and gambling tax revenue.

On June 29, 2026, Ingham County Circuit Court Judge Rosemarie Aquilina granted Michigan Attorney General Dana Nessel's request for a 14-day temporary restraining order barring Kalshi from offering or promoting sports contracts to people in the state. The platform must use third-party geolocation technology that complies with state rules to block users. Violations carry a fine of $120,000 per day, and the order was originally set to remain in effect through July 13.

Kalshi is a prediction-market platform regulated by the U.S. Commodity Futures Trading Commission (CFTC) that allows users to trade contracts based on sporting-event outcomes. Illinois has subjected such products to state sports-betting restrictions, sparking a dispute over whether federal derivatives oversight preempts state intervention. The outcome could also affect how prediction markets operate across states.

Kalshi recently sued Illinois officials to challenge a provision in the state's newly enacted budget bill that is scheduled to take effect on July 1. The company argues that restrictions on sporting-event contracts encroach on the CFTC's exclusive regulatory authority. It is seeking to block enforcement, saying the provision would immediately restrict its products and cause irreparable harm that monetary damages could not adequately remedy.

Prediction markets turn events such as sports outcomes into tradable event contracts. KalshiEX LLC is a designated contract market approved by the U.S. Commodity Futures Trading Commission. The dispute centers on whether the Commodity Exchange Act preempts state gambling laws. The CFTC argues that derivatives markets require uniform federal oversight, while New Mexico considers the contracts a form of online sports betting requiring a state license. The ruling could shape the boundaries of state enforcement and platform operations.

New Mexico’s attorney general sued Kalshi on June 4, 2026, alleging that the platform operated without a state license and allowed users aged 18 and older to participate, including people below the state’s minimum gambling age of 21. The case was moved to federal court on June 8. The CFTC filed a separate lawsuit against the state government on June 12, seeking confirmation of federal preemption and preliminary and permanent injunctions. New Mexico is the eighth state targeted by a CFTC lawsuit over enforcement, and the complaint did not seek a specific amount in damages.

Kalshi is a designated contract market regulated by the U.S. Commodity Futures Trading Commission (CFTC) that offers event contracts tied to outcomes including sports results. The Ohio Casino Control Commission considers such products to be sports betting that requires a license, prompting Kalshi to sue in October 2025. The dispute centers on whether federal derivatives regulation preempts state intervention, and its outcome could also affect platforms such as Polymarket.

On May 12, 2026, the CFTC filed an amicus brief with the U.S. Court of Appeals for the Sixth Circuit supporting Kalshi’s challenge to a federal district court’s March 2026 denial of an injunction. The CFTC called Ohio’s action a “jurisdictional overreach” and asked the court to affirm its exclusive authority over event contracts offered on designated contract markets. The filing marks the agency’s second intervention in a similar case, following its support for Crypto.com in the Ninth Circuit in February.

Kalshi is a designated contract market regulated by the US Commodity Futures Trading Commission, or CFTC, and argues that event contracts tied to sports, elections and other outcomes are swaps governed by the federal Commodity Exchange Act. The Nevada Gaming Control Board contends that Kalshi is offering gambling without a license. The dispute centers on whether the CFTC’s exclusive jurisdiction preempts state gaming laws and could determine whether prediction markets can operate under uniform nationwide rules.

On March 19, 2026, the US Court of Appeals for the Ninth Circuit denied Kalshi’s request for an emergency administrative stay, leaving intact a March 2 order returning the case to state court. On March 20, Nevada First Judicial District Court Judge Jason Woodbury issued a 14-day temporary restraining order. He extended it on April 3, finding that an event contract was functionally similar to gambling by comparing it with an identical $100 wager on a baseball game.

Kalshi, an event-contract exchange founded in 2018 and launched in 2021, lets users wager on real-world events through “yes/no” contracts. It expanded into politics in 2024 and sports in 2025. The dispute centers on whether the federal Commodity Exchange Act preempts state gambling laws, with implications for the regulatory boundaries of prediction markets across the United States.

Washington Attorney General Nicholas Brown sued Kalshi in King County Superior Court on March 27, 2026, alleging that it offered wagering on elections, sports and judicial events without a license from the Washington State Gambling Commission. Contracts cost $0.01–$0.99 each and pay the winner $1. The state is seeking a permanent injunction, restitution for all losses incurred by residents, disgorgement of proceeds and penalties for each violation. The complaint did not specify a total amount.

Kalshi is a designated contract market regulated by the U.S. Commodity Futures Trading Commission, offering event contracts that include the outcomes of sporting events. The dispute centers on whether such products fall exclusively under federal commodities law or may be treated by states as unlicensed gambling. The ruling could affect the platform’s ability to operate across state lines and define the boundary between federal and state regulatory authority.

On March 11, 2026, Kalshi sued Iowa Attorney General Brenna Bird, the Iowa Racing and Gaming Commission and its commissioners in federal court in Iowa. The platform said it had asked the state on March 10 for assurances that it would not take enforcement action but received a written response stating that it would provide no assurances about future enforcement. Kalshi therefore argued that the risk of its contracts being blocked had become concrete. The lawsuit seeks no monetary damages and primarily asks the court to bar state intervention.