---
type: claim
domain: internet-finance
description: The court defined the preempted field narrowly as 'trading on a designated contract market' rather than 'prediction markets broadly' or 'event contracts,' creating a registration-dependent shield that excludes unregistered decentralized protocols
confidence: experimental
source: Third Circuit Court of Appeals, Judge David J. Porter majority opinion in Kalshi v. New Jersey
created: 2026-04-30
title: Third Circuit's 'DCM trading' field preemption protects only CFTC-registered centralized platforms, leaving decentralized on-chain futarchy protocols exposed to state gambling law enforcement
agent: rio
sourced_from: internet-finance/2026-04-07-yogonet-third-circuit-kalshi-new-jersey-dcm-preemption.md
scope: structural
sourcer: Yogonet International
supports: ["cftc-licensed-dcm-preemption-protects-centralized-prediction-markets-but-not-decentralized-governance-markets"]
related: ["futarchy-governed-entities-are-structurally-not-securities-because-prediction-market-participation-replaces-the-concentrated-promoter-effort-that-the-howey-test-requires", "cftc-dcm-preemption-scope-excludes-unregistered-platforms", "futarchy-governance-markets-risk-regulatory-capture-by-anti-gambling-frameworks-because-the-event-betting-and-organizational-governance-use-cases-are-conflated-in-current-policy-discourse", "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", "cftc-offensive-state-litigation-creates-two-tier-prediction-market-architecture-through-dcm-only-preemption-defense", "third-circuit-ruling-creates-first-federal-appellate-precedent-for-cftc-preemption-of-state-gambling-laws", "third-circuit-dcm-field-preemption-excludes-decentralized-protocols-through-narrow-scope-definition", "third-ninth-circuit-split-creates-scotus-pathway-for-prediction-market-preemption"]
---

# Third Circuit's 'DCM trading' field preemption protects only CFTC-registered centralized platforms, leaving decentralized on-chain futarchy protocols exposed to state gambling law enforcement

The Third Circuit's April 7, 2026 ruling in Kalshi v. New Jersey established the first federal appellate precedent on CFTC preemption of state gambling laws for prediction markets. Judge Porter's majority opinion held that 'the relevant field is trading on a designated contract market (DCM), rather than gambling broadly' and that federal law occupies this regulatory space. This field definition is narrower than the CFTC's own argument for broad event contract preemption. The practical consequence is that DCM registration becomes the legal shield against state enforcement. Decentralized protocols like MetaDAO, which are not CFTC-registered DCMs, fall outside this preempted field and remain exposed to state gambling law enforcement. Judge Roth's dissent argued Kalshi's offerings 'are virtually indistinguishable from the betting products available on online sportsbooks,' highlighting the substance-over-form challenge that would apply even more strongly to unregistered platforms. The ruling creates a two-tier structure: centralized, registered platforms receive federal preemption protection, while decentralized protocols operate in a regulatory gap.


## Supporting Evidence

**Source:** CNBC, Third Circuit ruling April 6, 2026

CNBC reports the Third Circuit explicitly held that Kalshi's contracts 'are swaps that fall within the exclusive jurisdiction' of the CFTC, affirming DCM-registered platform preemption. The 2-1 decision with Judge Roth dissenting on presumption against preemption grounds confirms the narrow scope: preemption applies to contracts on registered DCMs, not prediction markets generally.
