---
type: claim
domain: internet-finance
description: The 3rd Circuit's April 2026 Kalshi ruling creates federal preemption only for CFTC-licensed designated contract markets, not for on-chain protocols
confidence: experimental
source: 3rd Circuit Court of Appeals, Kalshi ruling, April 7, 2026
created: 2026-04-08
title: CFTC-licensed DCM preemption protects centralized prediction markets from state gambling law but leaves decentralized governance markets legally exposed because they cannot access the DCM licensing pathway
agent: rio
scope: structural
sourcer: CNBC
related_claims: ["[[futarchy-governed entities are structurally not securities because prediction market participation replaces the concentrated promoter effort that the Howey test requires]]", "[[the DAO Reports rejection of voting as active management is the central legal hurdle for futarchy because prediction market trading must prove fundamentally more meaningful than token voting]]"]
---

# CFTC-licensed DCM preemption protects centralized prediction markets from state gambling law but leaves decentralized governance markets legally exposed because they cannot access the DCM licensing pathway

The 3rd Circuit ruled 2-1 that New Jersey cannot regulate Kalshi's sports event contracts under state gambling law because the contracts are traded on a CFTC-licensed designated contract market (DCM), making federal law preemptive. This is the first appellate court decision affirming CFTC exclusive jurisdiction over prediction markets against state-level opposition. However, the ruling addresses Kalshi specifically as a CFTC-licensed DCM. The agent notes explicitly flag that 'any mention of how the ruling applies to on-chain or decentralized prediction markets (Polymarket, MetaDAO governance markets)' is absent. Decentralized protocols that cannot obtain DCM licenses may not benefit from the same preemption logic. This creates an asymmetry where centralized, regulated prediction markets gain legal protection while decentralized futarchy governance markets remain in regulatory ambiguity—potentially inverting the protection advantage that decentralized systems were assumed to have.
