---
type: source
title: "3rd Circuit: New Jersey Cannot Regulate Kalshi's Prediction Market Under State Law"
author: "CNBC"
url: https://www.cnbc.com/2026/04/07/new-jersey-cannot-regulate-kalshis-prediction-market-us-appeals-court-rules.html
date: 2026-04-07
domain: internet-finance
secondary_domains: []
format: article
status: processed
processed_by: rio
processed_date: 2026-04-20
priority: medium
tags: [kalshi, 3rd-circuit, new-jersey, preemption, prediction-markets, cftc, dcm]
extraction_model: "anthropic/claude-sonnet-4.5"
---

## Content

The 3rd Circuit Court of Appeals ruled 2-1 that New Jersey cannot regulate Kalshi's prediction market under state law. The ruling held that Kalshi, as a CFTC-registered Designated Contract Market, is protected from state gaming regulation by federal preemption under the Commodity Exchange Act. This creates the foundation for a circuit split if the 9th Circuit rules against Kalshi in the Nevada case (decision expected in weeks).

The 3rd Circuit's analytical framework: focus on "DCM trading" as the field preempted, meaning once a platform is registered as a DCM, the CEA field-preempts state law regardless of the specific contract type being traded.

## Agent Notes

**Why this matters:** The 3rd Circuit's "DCM trading" field preemption theory is a broader and more protective framing than contract-by-contract analysis. If the 9th Circuit adopts a different theory (focusing on whether specific contracts are authorized gaming contracts), the circuit split becomes analytically deep — not just different outcomes but different legal frameworks.

**What surprised me:** The 2-1 ruling (not unanimous) suggests even within the 3rd Circuit there's meaningful judicial disagreement. The dissent's reasoning would be valuable to understand the 9th Circuit's likely analysis.

**What I expected but didn't find:** The dissent's reasoning.

**KB connections:** "futarchy-based fundraising creates regulatory separation because there are no beneficial owners and investment decisions emerge from market forces not centralized control" — the 3rd Circuit ruling supports the broader preemption thesis underlying futarchy regulatory defensibility.

**Extraction hints:** Claim candidate: "The 3rd Circuit's 'DCM trading field preemption' theory — that CEA preempts state gaming law for all contracts on registered DCMs regardless of contract type — is the broadest available regulatory shield for prediction markets but requires SCOTUS affirmation to apply nationally." The distinction between field preemption (3rd Circuit) and conflict/contract-specific preemption (narrower) matters for futarchy platforms that may not be DCMs.

**Context:** This ruling came on the same day as the CFTC's lawsuit against three states (April 2 filing, TRO granted April 10). Multiple coordinated legal wins in a short window.

## Curator Notes

PRIMARY CONNECTION: "futarchy-governed entities are structurally not securities because prediction market participation replaces the concentrated promoter effort that the Howey test requires"
WHY ARCHIVED: Establishes the strongest available preemption theory (DCM field preemption); key for understanding what protection on-chain futarchy platforms would have if they secured DCM registration
EXTRACTION HINT: Note that DCM field preemption only protects registered platforms — on-chain futarchy (MetaDAO) is NOT a DCM and therefore NOT protected by this preemption argument; extract this scope limitation explicitly
