Kalshi wins pivotal Third Circuit appeal as Washington court blocks state operations
The U.S. Court of Appeals for the Third Circuit ruled in Kalshi's favor on April 6, 2026, in what sources describe as the prediction market industry's most important appellate decision to date. The ruling positions appeals courts as a critical battleground for prediction market legal status. Separately, a Washington state judge ruled that Kalshi cannot operate most of its prediction markets in that state, reopening the question of whether a federal framework governs such platforms.
The Third Circuit victory gives Kalshi a federal appeals precedent it can now cite in every state case, but it does not erase the five state court losses already on the board. For Polymarket and every CFTC-registered platform, the split means contract validity still hinges on geography until a circuit majority or the Supreme Court weighs in.
Kalshi must now choose between costly state-by-state geofencing and gambling that no appellate court follows Washington's lead. Each fresh state injunction chips away at the uniform national market that federal registration was supposed to guarantee. The tension between Kalshi's federal win and its state losses will shape every platform's compliance budget and expansion timeline for years.
Kalshi's Third Circuit win arrives amid a five-state collapse of its federal preemption defense, with courts in Washington, Connecticut, Wisconsin, New York, and Utah now voiding the CFTC-registration shield the platform built its national scale upon.