New Jersey Regulator Appeals Injunction in Fight Against Kalshi

The Garden State isn’t ready to give up its fight against sports prediction markets just yet. 

The New Jersey Division of Gaming Enforcement (DGE) has filed an appeal over an injunction against its cease-and-desist letter sent to Kalshi. The court order allows the prediction market giant to continue operating in the state, despite the state’s objections, since the offering legally qualifies as trading instead of gambling.

The DGE continues to argue that these controversial markets should qualify as gambling. While customers aren’t betting against “the house”, they are betting money on the result of a certain game or event. 

New Jersey is one of three states looking to shut down Kalshi’s prediction markets. Nevada and Maryland have sent cease-and-desist letters, though the former was also hit with an injunction from a local court.

These states are failing to push out Kalshi due to federal regulations around trading platforms. The Commodity Futures Trading Commission (CFTC) is the only regulator for these platforms, which means the group is the only one with the power to force operators like Kalshi to shut down. 

All Eyes Remain on the CFTC

While state regulators and Kalshi are battling things out in court, the CFTC has mostly remained on the sidelines. The department originally took a favorable approach to sports prediction markets, even assisting Robinhood and Kalshi with its March Madness market. However, the regulator has fallen silent as states have begun to push back on the emerging industry.

The CFTC had originally planned to hold a round table on prediction markets in April, but abruptly canceled the event without much explanation. This signals that the group may be second-guessing its support for the industry, especially as the opposition continues to grow.

With courts confirming the CFTC’s role in deciding the fate of sports prediction markets, they will be forced to make an official ruling soon.