The CFTC is proposing clearer rules for event contracts as New Jersey asks the Supreme Court to review whether it can enforce gambling laws against Kalshi’s sports markets. Neither step settles the dispute over how federal oversight intersects with state authority.
Two measures, different purposes
Announced on Oct. 9, the CFTC’s proposed amendment would classify contracts tied to sports, politics, culture and weather as swaps. The agency says their exchange-based structure differs from ordinary betting: buyers and sellers set prices through orders, while exchanges collect trading fees rather than making money when a customer loses.
Chairman Michael S. Selig said, “The Commodity Exchange Act gives his agency sole regulatory authority over event contracts.” That is the CFTC’s position, not a court’s final ruling on the reach of state gambling laws. The proposal remains open to public comment and has not been finalized.
A separate interim final rule puts the agency’s longstanding exclusion for qualifying casino games and sportsbook wagers into its regulations. The exclusion applies when an operator is authorized by a state or tribal government and the wager is governed by the relevant gambling laws. It does not extend to transactions negotiated or carried out among participants on exchanges or other markets.
The distinction between event contracts and conventional wagers is central to the CFTC’s approach. Its proposed framework for event contracts is still under consideration, while the gambling exclusion takes effect when it is published in the Federal Register.
Kalshi’s New Jersey protection remains temporary
Kalshi can continue offering sports contracts in New Jersey under a preliminary injunction. On April 6, the Third Circuit upheld that protection, finding Kalshi had a reasonable chance of showing that federal law overrides the state’s restrictions. The court did not issue a final judgment in the lawsuit.
New Jersey filed its Supreme Court petition on Sept. 2. It asks whether federal commodities law prevents states from regulating sports bets offered on markets registered with the CFTC. The justices have not agreed to hear the case, and filing the petition does not lift the injunction or require Kalshi to stop offering its contracts in the state.
The continuing uncertainty reflects a broader legal dispute over state gambling rules and federal oversight. For Kalshi’s New Jersey operation, the practical position remains unchanged for now: sports contracts are available under court-ordered temporary protection, not a final ruling that resolves the state’s authority.
State safeguards are part of the dispute
New Jersey’s petition points to rules it wants to preserve, including a minimum betting age of 21, voluntary self-exclusion and limits on wagers by people with inside information. Licensed sportsbooks in the state also cannot take bets on college events held in New Jersey or involving a New Jersey college team, including Rutgers games played elsewhere.
The National Council of Legislators from Gaming States supports the view that federal oversight of an exchange should not erase states’ ability to enforce gambling rules. A prediction-market account does not automatically carry the same protections or requirements as an account with a New Jersey-licensed sportsbook, so eligibility terms, exclusion policies and dispute procedures may differ.
The next steps are administrative and judicial. The CFTC is collecting comments on its event-contract proposal; Kalshi’s response to New Jersey’s Supreme Court petition is due Nov. 9, according to the court docket. The court has not said whether it will take the case.
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