A Swap By Any Other Name: The Third Circuit Sides With Kalshi In High-Stakes Fight Over Who Regulates Prediction Markets

BusinessPolicyA Swap By Any Other Name: The Third Circuit Sides With Kalshi In High-Stakes Fight Over Who Regulates Prediction MarketsByBrian Jacobs,Contributor.for Morvillo Abramowitz Grand Iason& AnelloPCFollow AuthorMay 13, 2026, 01:41pm EDT--:-- / --:--This voice experience is generated by AI. Learn more.This voice experience is generated by AI. Learn more.Sports bettingMagnificThose who bet on the CFTC in the high-stakes fight over who will regulate sports-related event contracts just hit pay dirt. At least for now, bettors will remain free to buy swaps contracts on licensed exchanges such as KalshiEX LLC (“Kalshi”) tied to things such as the number of Knicks playoff games Timothée Chalamet will attend. On April 6, 2026, a divided panel of the United States Court of Appeals for the Third Circuit agreed that Kalshi was likely to succeed in its argument that the Commodity Exchange Act (“CEA”) gives the Commodity Futures Trading Commission (“CFTC”) exclusive jurisdiction over sports-related event contracts traded on CFTC-licensed designated contract markets (“DCMs”), preempting New Jersey’s state gambling laws. Kalshi is a financial services company operating a DCM licensed by the CFTC. On Kalshi’s exchange, users can buy and sell “event contracts,” which are financial instruments whose value depends on whether a specified event occurs. Users can, for example, take positions on whether a sports team will win a game, or on how many games a given celebrity will attend, with payouts tied to the outcome. New Jersey’s Division of Gaming Enforcement sought to enforce New Jersey’s gambling laws against Kalshi’s sports-related event contracts, but Kalshi maintained that its sports-related event contracts qualify as swaps under the CEA, giving the CFTC exclusive jurisdiction. The district court agreed with Kalshi and preliminarily enjoined New Jersey. The Third Circuit agreed with the district court (and Kalshi) in a split 2-1 decision that could foretell how the Supre...