On Monday, a federal judge granted Kalshi’s preliminary injunction and temporary restraining order in New Jersey.
New Jersey was the second state to send Kalshi a cease and desist letter over its sports contracts. State gambling regulators argued that Kalshi’s sports contracts were effectively sports wagers, so they violated New Jersey’s sports betting law. Kalshi countered that as a CFTC-regulated derivatives platform, only the CFTC could limit its contracts.
The New Jersey district court drew from Kalshi’s case against the CFTC over election contracts to address New Jersey’s argument that Kalshi’s sports contracts constitute gaming:
Event contracts are, by definition, staking money on the outcome of a contingent event and under the CFTC’s logic the special rule would apply to any event contract. Thus the only workable interpretation of the special rule is that ‘unlawful under any Federal or State law’ refers to the underlying event rather than the act of staking money on that event…Furthermore, even if “unlawful” refers to state gambling laws or “gaming” refers to the contracts at issue here, that would subject Kalshi to the review of the CFTC—not state regulators.
Is the CFTC regulators’ next targets?
Earlier in April, a federal judge issued a similar ruling granting Kalshi a temporary restraining order and preliminary injunction over its sports and election contracts in Nevada. The judge reached a similar conclusion that the CFTC was the only regulator able to police Kalshi’s event contracts.
While these victories only prevent Kalshi from being penalized during the court proceedings, they are early signs that state regulators may not prevail against Kalshi itself. Instead, state regulators may have to target the CFTC if it refrains from the public interest review that would remove Kalshi’s sports contracts from the exchange.
New reasons to hold onto sports
According to Kalshi market data, about 78% of the previous weekend’s trading activity was in sports markets. Sports not only lend themselves to creating a large number of markets. They also receive high trading volume and therefore, increased revenue.
Let's see what @Kalshi did this weekend... in case there remains any doubt they are now a sports first company... all else be damned (except for the presidential election)...#justdontcallitsportsbetting pic.twitter.com/P8swYsnIjM
— Alfonso Straffon 🇨🇷🇺🇸🇲🇽 (@astraffon) April 28, 2025
As Kalshi continues fighting state regulators to offer its sports contracts nationwide, the economic stakes of losing sports contracts in markets like New Jersey and Nevada are higher.
