A New Jersey judge awarded Kalshi with a preliminary injunction on Monday, which means the predictions market is allowed to operate in the Garden State. The New Jersey Division of Gaming Enforcement (DGE) had issued cease-and-desist-letter last month.
Predictions markets have come under heavy controversy as of late, as other states had also distributed cease-and-desist letters within the last month. Kalshi got the same outcome in Nevada, too, getting a preliminary injunction.
This does not mean that Kalshi has won the legal battle. However, a New Jersey judge certainly feels the company has a compelling enough to case to win, as it is federally regulated under the Commodity Futures Trading Commission (CFTC).
Why the judge favored Kalshi
The New Jersey DGE sent Kalshi a cease-and-desist letter because it believed the company was “listing unauthorized” sports betting markets for individuals in the Garden State. However, Kalshi received federal approval earlier this year to include sports contracts as a market.
In vying for a preliminary injunction, Kalshi had argued that the CFTC supersedes New Jersey’s law. That is ultimately what the judge ruled, according to The Closing Line newsletter:
“Because I found above that Kalshi has established a likelihood of success in demonstrating that New Jersey law is preempted as applied to its sports-related contracts, I also conclude that the interests favor injunction.
“To find that the interests disfavor Kalshi — especially after determining that it has met its burden on the merits — would mean leaving it subject to state enforcement or obligating it to shift its business practices, consequences that are not cleanly undone.”
The judge ruled that Kalshi has a good chance at winning the case moving forward, because of its position with the CFTC, writing:
“Finally, I am persuaded that Kalshi’s sports-related event contracts fall within the CFTC’s exclusive jurisdiction and am unconvinced by defendants’ arguments to the contrary
“Defendants argue that sporting events are without potential financial, economic, or commercial consequence. On the record before me, I disagree. … Because I conclude that Kalshi has demonstrated a reasonable chance of prevailing — which in this case means proving that at the very least field preemption applies — I do not consider whether conflict preemption may also apply.”
Can predictions markets pose a threat to regulated gambling?
Kalshi started offering sports markets during the Super Bowl and continued through March Madness. The company is still offering NBA and MLB contracts, too.
Those who purchase a sports contract can trade out of it, especially as the value can change before the expiration date. It is similar to a sportsbook offering a cash out option.
There are certainly some similarities to sports betting while also giving individuals another option to spend money. BetMGM CEO, Adam Greenblatt, said that predictions markets can be a threat to legal sports betting. He said during a Q1 2025 earnings call:
“Whether it represents a risk or an opportunity, things are elements of both, actually. But in our existing online sports betting states, it represents a degree of small risk, only because the markets that prediction markets serve would be lower-margin for operators.
“There would be no impediment to sports betting operators participating in that market so we wouldn’t lose that business in time, it would just come into less revenue for the operator.”
Kalshi appears to be in a good position to continue operating, at the very least, in New Jersey.
