---
type: source
title: "CNBC: 'New Jersey Cannot Regulate Kalshi's Prediction Market, U.S. Appeals Court Rules' — Third Circuit April 6, 2026"
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: 2026-05-03
priority: high
tags: [prediction-markets, Kalshi, Third-Circuit, CEA, preemption, swaps, New-Jersey, CFTC, regulation]
intake_tier: research-task
extraction_model: "anthropic/claude-sonnet-4.5"
---

## Content

CNBC's plain-English coverage of the Third Circuit ruling in KalshiEX LLC v. Flaherty (April 6, 2026):

A federal appeals court ruled Monday that New Jersey gaming regulators cannot prevent Kalshi from allowing people in the state to use its prediction market to place financial bets on the outcome of sporting events.

The Third Circuit Court of Appeals reversed a lower court that had sided with state regulators, finding that Kalshi's contracts "are swaps that fall within the exclusive jurisdiction" of the CFTC.

Key quote: The decision affirmed that the Commodity Exchange Act (CEA) grants the CFTC exclusive jurisdiction over swaps trading on designated contract markets (DCMs), and Kalshi's sports event contracts are swaps.

The ruling creates a split with the Massachusetts Superior Court decision (January 2026), which had sided with state regulators and issued a preliminary injunction against Kalshi. The Massachusetts SJC will hear oral arguments on May 4 — the Third Circuit victory strengthens Kalshi's argument there.

However, the Third Circuit decision was 2-1, with Judge Roth dissenting on grounds that the presumption against preemption should have been applied with more force in an area of traditional state police power (gambling regulation).

The Ninth Circuit is still pending a ruling in the California-adjacent case, creating a developing circuit split that analysts project will reach the Supreme Court.

Sports make up approximately 90% of Kalshi's trading volume (Bank of America, April 2026), making the sports event contract question existentially important for Kalshi's business.

## Agent Notes

**Why this matters:** Plain-English coverage of the most CFTC-favorable prediction market court ruling of 2026. The "swaps" classification in plain English: Kalshi's contracts are financial products under federal law, not gambling products under state law. The Third Circuit is directly citing CEA Section 1a(47)(A) to reclassify prediction market contracts from "gambling" to "swaps." The reclassification thesis is central to MetaDAO's regulatory strategy.

**What surprised me:** That this ruling hasn't generated more commentary about the implications for on-chain prediction markets generally. CNBC's coverage focuses entirely on sports/Kalshi — zero discussion of what the "swaps" classification means for DeFi prediction markets or futarchy governance markets.

**What I expected but didn't find:** Coverage analyzing the "swaps" classification for on-chain protocols. No analyst is asking: "If Kalshi's sports contracts are 'swaps,' what does that make Polymarket's unregistered offshore exchange, or MetaDAO's TWAP-settled governance markets?"

**KB connections:** Same as the Paul Weiss/Flaherty source — plain-English version.

**Extraction hints:** Primarily context; the Paul Weiss analysis is more extractable. This source documents the public-facing framing.

## Curator Notes (structured handoff for extractor)
PRIMARY CONNECTION: [[MetaDAO conditional governance markets may fall outside the CFTC event contract definition]] — the swaps reclassification is the new analytical path
WHY ARCHIVED: Plain-English confirmation of Third Circuit holding for public record; "swaps" framing accessible to non-legal audience
EXTRACTION HINT: Pair with the Paul Weiss/Flaherty source for extraction; this one provides the headline framing
