A federal appeals court has ruled that the state of New Jersey cannot shut down the prediction market platform Kalshi, delivering a major legal victory for the company against a wave of state-level enforcement actions.

In a 2-1 decision, the Third Circuit Court of Appeals determined that Kalshi’s sports-related prediction contracts fall under the jurisdiction of the federal Commodity Exchange Act (CEA). The court ruled that this federal law overrides individual state gambling laws.

The majority concluded that because Kalshi self-certified its compliance and the federal regulator (the CFTC) has not blocked these contracts or deemed them against the public interest, they are approved by default. The court rejected New Jersey’s argument that sports outcomes do not qualify as financial “swaps” under the CEA.

Judge Jane Roth dissented, arguing that Kalshi’s offerings—such as betting on NFL game winners or point spreads—are fundamentally just sports betting. She argued that New Jersey’s gambling regulations do not undermine federal objectives.

States across the U.S. have been attempting to crack down on prediction markets like Kalshi and Polymarket, arguing they violate local gambling laws. However, court rulings remain highly mixed. While the Third Circuit ruled in Kalshi’s favor here, the Ninth Circuit recently allowed Nevada to move forward with a similar ban against the platform.

CFTC Chairman Michael Selig recently reaffirmed the agency’s “exclusive jurisdiction” over these platforms. He noted that the agency’s definition of commodities is extremely broad, treating prediction contracts for sports or political events the same way it treats traditional commodities like corn or grain.