New Jersey Emerges Victorious in Betting Controversy as CFTC Shelves Discussion Round
Feds Back Kalshi in Legal Tussle over Prediction Markets
In a significant victory for New York-based prediction market provider Kalshi, a federal judge has sided with the company in its legal spat with New Jersey gambling regulators. The ruling allows Kalshi to continue offering sports and politics betting events in the state.
U.S. District Judge Edward S. Kiel granted Kalshi a temporary restraining order and preliminary injunction in its conflict with the New Jersey Division of Gaming Enforcement (NJDGE) and the New Jersey Casino Control Commission. This decision simultaneously denies cease-and-desist orders that the NJDGE had issued to Kalshi and Robinhood in March.
Judge Sets Precedent for Federal Jurisdiction
Judge Kiel expressed his opinion that prediction markets fall under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC), drawing parallels to Kalshi's recent victory against Nevada regulators. He was unconvinced by the defendants' arguments that the markets should not be subject to federal regulation.
Interestingly, the feds canceled a scheduled roundtable on event contracts, which was expected to provide valuable insights and opinions regarding the lawfulness of these contracts.
Double Victory for Kalshi
This development comes as a double win for Kalshi, as Judge Kiel made two significant rulings in their favor. The primary decision establishes that Contracts For Difference (CFDs) are subject to federal, not state law. The judge underscored that sports-related events carry potential financial, economic, or commercial consequences, thereby discouraging the regulators' claim that CFDs are not financial in nature.
Future Legal Battles Ahead
Kalshi could potentially notch a third legal victory in a row, following a lawsuit it filed against Maryland regulators last week. The company's recent hiring of gaming policy expert Sara Slane, who played a key role in overturning the federal sports betting ban, indicates a long-term legal and lobbying strategy.
The outcome of these legal battles could have far-reaching implications, potentially redefining jurisdictional boundaries between state gambling laws and federally regulated financial derivatives.
[1] Kalshi files suit against Maryland over sports betting ban - (url)[2] New Jersey sues Robinhood and Kalshi over prediction market offerings - (url)[3] Nevada regulators drop cease-and-desist order against Kalshi - (url)[4] Kalshi appoints Sara Slane as advisor - (url)[5] Kalshi's battle with state regulators - (url)
- Despite the upcoming roundtable on event contracts being canceled by the feds, Judge Kiel's robust ruling in favor of Kalshi established that Contracts For Difference (CFDs) are governed by federal law, not state law, for prediction markets.
- In light of their recent victory against New Jersey gambling regulators, Kalshi now faces another legal battle, having filed a lawsuit against Maryland regulators last week, marking a potential third legal victory in a row for the company.
- With the hiring of gaming policy expert Sara Slane, who played a key role in overturning the federal sports betting ban, Kalshi appears to be implementing a long-term legal and lobbying strategy, signifying potential future struggles between state gambling laws and federally regulated financial derivatives.
