Court Rules Sports Prediction Market Contracts Are CFTC-Regulated Swaps, Preempting State Laws

A federal appeals court held that Kalshi’s sports-event contracts are swaps traded on a CFTC-designated contract market and thus fall under exclusive CFTC jurisdiction.

The 3rd Circuit upheld a district court injunction blocking New Jersey from enforcing its sports-wagering law against Kalshi in a 2-1 decision.

Judge Jane Roth dissented, saying Kalshi’s offerings closely resemble regulated online sportsbook bets.

The CFTC has filed lawsuits against several states and is seeking public comment on regulating prediction markets while Congress is considering legislation to restrict such contracts.