Kalshi Faces Pushback as New Jersey Fights Prediction Market’s Injunction Bid

New Jersey has filed an opposition to a preliminary injunction filed by Kalshi, accusing the prediction market of making an “endrun” around its regulatory scheme by “offering sports wagers in a different format.”

The filing, reported by established Gaming Lawyer Daniel Wallach, comes after Kalshi issued lawsuits against New Jersey and Nevada last month in response to cease-and-desist orders. 

The New Jersey Department of Gaming Enforcement (NJDGE) threatened further action if Kalshi did not comply with orders to leave the state, including potentially “any measures available under state law.”

In response, Kalshi claimed that state law didn’t apply to its platform.

Kalshi Questions New Jersey State Law

In the filing, New Jersey Attorney General Matthew Platkin took issue with Kalshi’s claim that the Commodity Exchange Act (CEA) preempts the state’s Sports Wagering Act.

“As a threshold matter, Kalshi’s event contracts do not fall under the CEA,” Platkin wrote. “But even if they did, it would not matter. The CEA references state law several times. It expressly preempts certain state laws; but not sports-related event contracts at issue here.”

“It also makes clear that nothing else in the CEA supersede(s) or limit(s) state law or the jurisdiction of state courts.”

Kalshi is available in all 50 states, while sports betting is legally operative in only 38 states and Washington, D.C.

Its prediction markets, which allow users to buy and sell contracts for real-world events such as the Super Bowl, have been questioned because they lack several features found at licensed sportsbooks (for example, responsible gaming safeguards).

Platkin suggested that allowing Kalshi to evade state laws would have severe consequences, including eroding “States’ historic police powers to regulate gambling within their borders and diminish their ability to collect fees and taxes from sports wagers.” 

An Issue of Self-Inflicted Harm?

Platkin pushed back on the idea that Kalshi stands to suffer if its preliminary injunction is denied, saying such “harm is entirely avoidable.”

“Kalshi can accept nearly all sports wagers in New Jersey if it simply obtains a license and complies with the Sports Wagering Act,” he wrote. “And for the small subset of wagers that are prohibited under state law — college sporting events involving New Jersey colleges or taking place in New Jersey — Kalshi’s alleged harm is both entirely speculative and purely monetary.”

“So Kalshi will suffer no irreparable harm.”

Last month, Kalshi introduced single-game betting markets for March Madness. Notably, the NCAA men’s basketball East Regional was played at the Prudential Center in Newark, N.J.

Platkin claimed that Kalshi’s inability to secure a license has done more harm than New Jersey’s cease-and-desist order.  

Other States Voice Concerns

New Jersey is not alone in its concerns. It’s one of six states—Illinois, Maryland, Montana, Nevada, and Ohio—that have issued a cease-and-desist warning.  

Last week, the Tennessee Sports Wagering Council sent a letter to the Community Futures Trading Commission (CFTC), encouraging them to remove markets such as Kalshi and Robinhood from the consumer marketplace.

“The Tennessee Legislature has put in place many requirements of its sports betting Licensees in order to protect those who choose to wager in our state,” the council said. “The CFTC-regulated entities currently offering these sports events contracts are not compliant with these protections (or many others) mandated by the Tennessee Legislature.”