Kalshi State Regulator Challenges: A Status Report

The Story

The biggest regulatory fight in US sports betting right now is not about a sportsbook. On April 6, 2026, the US Court of Appeals for the Third Circuit issued a 2-1 ruling holding that the federal Commodity Exchange Act preempts New Jersey's cease-and-desist order against KalshiEx LLC, the CFTC-regulated prediction market. The opinion, reported by CNBC, Reuters and Coindesk, affirms a May 2025 district court injunction that had already blocked New Jersey's attempt to shut down Kalshi's sports-related event contracts.

The Third Circuit decision is the highest-profile court win yet for Kalshi. But it is not the end of the fight. Other states are running parallel cases, and the rulings are not uniform.

The Background

Kalshi launched sports-related event contracts in early 2025 — binary contracts on outcomes like "Will Team X win the Super Bowl?" — under its CFTC designation as a designated contract market. State gaming regulators in New Jersey, Nevada, Maryland, Massachusetts, Ohio and elsewhere argued the contracts were indistinguishable from sports wagers and fell under state gaming law. Multiple states issued cease-and-desist letters in the first half of 2025.

Kalshi's response was to sue the regulators in federal court, arguing the Commodity Exchange Act grants the CFTC exclusive jurisdiction over DCMs and therefore preempts state gaming laws. New Jersey was the first case to reach appeal. Per a May 2025 analysis by Holland & Knight, the district court's preliminary injunction turned on a straightforward preemption argument and the state's inability to show Kalshi's contracts were illegal under federal law.

What It Means For Bettors

If you are in New Jersey, the Third Circuit ruling means Kalshi remains available and the state cannot act against the platform. Nevada is the opposite: a Nevada state judge extended a ban on Kalshi in that state and rejected the CFTC-preemption argument, so Nevada residents cannot use Kalshi's sports markets. Maryland, Massachusetts and Ohio have all issued adverse rulings of various scopes against Kalshi. District courts in other jurisdictions have reached no uniform conclusion.

The result is a patchwork that will not resolve until either the Supreme Court takes a case or Congress amends the Commodity Exchange Act. For now, whether you can legally trade a Kalshi sports contract depends on which federal circuit you live in and which state regulator has taken action.

What Happens Next

The Third Circuit ruling creates a potential circuit split once the Nevada case reaches the Ninth Circuit on appeal, which Kalshi has signaled it will pursue. A split would almost certainly draw the Supreme Court's attention. Separately, the CFTC itself is in the middle of a rulemaking on event contracts that could either endorse or limit the sports category. And state attorneys general have coordinated through the National Association of Attorneys General to push Congress for a statutory carve-out. Expect this to be the most consequential US gambling legal fight of 2026.