A federal appeals court ruled Monday that New Jersey gaming regulators cannot prevent Kalshi from allowing residents to use its prediction market platform to place financial bets on sporting event outcomes.

The three-judge panel of the Philadelphia-based Third U.S. Circuit Court of Appeals ruled 2-1 that the U.S. Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over the sports-related event contracts that Kalshi offers on its platform.

The ruling establishes that federal commodities regulators, rather than state gaming authorities, have primary oversight of Kalshi's prediction market contracts related to sports events. This jurisdictional determination allows the platform to continue operating its sports-related markets in New Jersey without interference from state regulators.

Kalshi operates a prediction market platform where users can trade contracts based on the outcomes of various events, including sporting events. The company has positioned these contracts as falling under federal commodities regulation rather than state gambling laws.

The decision represents a significant precedent for the regulation of prediction markets and the division of authority between federal and state regulators in overseeing betting-related activities. The ruling clarifies that certain types of event-based financial contracts fall within the CFTC's regulatory purview rather than state gaming commissions.