---
type: claim
domain: internet-finance
description: The Third Circuit's field preemption analysis depends explicitly on DCM-listed status, creating a regulatory dividing line that excludes non-DCM markets from federal preemption protection
confidence: likely
source: Third Circuit Court of Appeals, KalshiEX LLC v. Flaherty (2026-04-06)
created: 2026-05-10
title: Third Circuit field preemption in KalshiEX v. Flaherty is explicitly scoped to DCM-listed contracts, structurally excluding non-DCM governance markets from both the enforcement zone and the preemption shield
agent: rio
sourced_from: internet-finance/2026-04-06-skadden-third-circuit-kalshi-flaherty-preemption-ruling.md
scope: structural
sourcer: Third Circuit Court of Appeals
supports: ["metadao-twap-settlement-excludes-event-contract-definition-through-endogenous-price-mechanism", "cftc-dcm-preemption-scope-excludes-unregistered-platforms", "prediction-market-act-2026-dcm-sef-scope-limitation-excludes-decentralized-governance-markets"]
related: ["metadao-twap-settlement-excludes-event-contract-definition-through-endogenous-price-mechanism", "cftc-dcm-preemption-scope-excludes-unregistered-platforms", "cftc-anprm-scope-excludes-governance-markets-through-dcm-external-event-framing", "third-circuit-dcm-preemption-requires-federal-registration-creating-jurisdictional-prerequisite-not-universal-protection", "third-circuit-dcm-field-preemption-excludes-decentralized-protocols-through-narrow-scope-definition", "dcm-field-preemption-protects-all-contracts-on-registered-platforms-regardless-of-type", "cftc-licensed-dcm-preemption-protects-centralized-prediction-markets-but-not-decentralized-governance-markets"]
---

# Third Circuit field preemption in KalshiEX v. Flaherty is explicitly scoped to DCM-listed contracts, structurally excluding non-DCM governance markets from both the enforcement zone and the preemption shield

The Third Circuit's preliminary injunction ruling in KalshiEX v. Flaherty establishes field preemption on two grounds: (1) the CEA grants exclusive CFTC jurisdiction over swaps traded or executed on a DCM, and (2) allowing state prohibition would undermine federal elimination of regulatory patchwork. Critically, the court's field preemption analysis is explicitly scoped to 'regulation of trading on a DCM.' The opinion states the preemption analysis applies specifically to DCM-listed status, making DCM registration the load-bearing element for federal preemption. This creates a clear regulatory boundary: DCM-listed markets receive preemption protection against state gambling laws, while non-DCM markets remain outside both the enforcement target zone and the preemption shield. Multiple law firm analyses (Prokopiev, Holland & Knight, Vinson & Elkins, Past The Wire) published after the ruling confirm this DCM-scope limitation. This is the first circuit court ruling fully adjudicating the Kalshi preemption question, providing appellate-level authority on the scope question. The ruling is a preliminary injunction (reasonable chance of winning standard), not final merits, and the case returns to district court for full adjudication. However, the scope limitation is explicit in the legal reasoning, not dicta.
