Is Kalshi legal in New Jersey?

On March 27, 2025, New Jersey's Division of Gaming Enforcement sent a cease-and-desist letter to Kalshi's chief executive. As the federal court's opinion describes it, the Division said Kalshi was listing unauthorized sports wagers in violation of the New Jersey Sports Wagering Act and the state constitution (p.5). The Sports Wagering Act lets only licensed operators offer sports wagering, and a violation is a fourth-degree crime with a fine of up to $100,000. The constitution bars wagering on a college sport or athletic event in New Jersey, or on any event a New Jersey college team plays in. The Division "demanded Kalshi to immediately cease and desist the offering of any sports wagering to New Jersey residents and to void any existing wagers," with a deadline of 11:59 p.m. on March 28 (p.5).

Kalshi sued instead. Its complaint, dated March 29, 2025, asked the federal court in New Jersey to stop the Division, the Casino Control Commission and state officials from enforcing those laws against it (KalshiEX v. Flaherty, No. 1:25-cv-02152). The Division extended its compliance deadline to April 30 while the motion was briefed (pp.5-6). New Jersey argued that sports events lack the financial, economic or commercial consequence the federal definition requires, and that Kalshi could offer most of its sports contracts if it obtained a New Jersey license (pp.8-9).

On April 28, 2025, Judge Edward S. Kiel granted Kalshi's motion for a preliminary injunction. He was "persuaded that Kalshi's sports-related event contracts fall within the CFTC's exclusive jurisdiction" (p.12), found that Kalshi had a reasonable chance of showing field preemption, and set a $100,000 bond to match the Sports Wagering Act's maximum fine (p.16). He also wrote that the ruling does not prejudge the case: "If defendants are proven correct, they may proceed with enforcement actions" (p.15). We read the opinion, not the separate order that accompanied it, and we found no order staying the injunction.

New Jersey appealed. The Third Circuit heard argument on September 10, 2025, and affirmed on April 6, 2026 (No. 25-1922), "by a 2-1 vote," as New Jersey's petition puts it (petition p.2). Judge Porter wrote for the majority. It held that Kalshi's sports-related event contracts are swaps under the Commodity Exchange Act because the outcome of a sports event "can be associated with a potential financial, economic, or commercial consequence" (p.8), and that "both field and conflict preemption apply" (p.9). It defined the preempted field as trading on a CFTC-designated contract market, not gambling generally (p.11).

Judge Roth dissented. In her view Kalshi's sports contracts are "virtually indistinguishable" from sportsbook bets, the presumption against preemption applies with special force to gambling, and "Kalshi cannot demonstrate a likelihood of success on the merits and show that New Jersey's gambling laws are federally preempted" (dissent pp.1-2). Both rulings came at the preliminary-injunction stage, not after a trial, and neither is a ruling on taxes.

New Jersey filed a petition on September 2, 2026, after two deadline extensions from Justice Alito. The case is Flaherty v. KalshiEX, No. 26-299. The question it presents is "Whether the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act preempted States from regulating sports bets that occur within their jurisdictions if those bets are offered on markets registered with the Commodity Futures Trading Commission" (p. i). New Jersey says the Third Circuit's decision conflicts with a Ninth Circuit ruling of August 28, 2026, Kalshi v. Assad, and asks the Court to grant review (pp.2, 33).

The docket shows Kalshi's response was due October 8; a motion to extend was filed September 18, and on September 22 the time was extended to November 9, 2026. Eleven amicus briefs were filed between September 22 and October 8, from the National Council of Legislators from Gaming States, gaming-regulator associations, the Cabazon Band of Cahuilla Indians, Ohio with 38 other states and the District of Columbia, Stop Predatory Gambling, former Senator Christopher J. Dodd, 145 tribes and tribal organizations, the NFL, former CFTC Chairman Gary Gensler, the Casino Association of New Jersey and the American Gaming Association. The states' brief says it is in support of New Jersey; we did not read the others. The Court has not said whether it will take the case. Kalshi at the Supreme Court follows this petition and two others on the same question, and is Kalshi gambling? sets out both sides.

Kalshi's position is that its contracts are swaps listed on a CFTC-designated contract market, so the CFTC's exclusive jurisdiction displaces state gambling law, and that the CFTC had the power to review its sports contracts for the public interest and did not act (opinion p.8). Kalshi told the court it would face civil and criminal liability if it kept operating, or lose business it could not recover if it complied, and that it had no need or means to geolocate users (p.13).

The CFTC is not a party to the New Jersey case, and the Third Circuit's opinion lists no counsel for it. On October 9, 2026 the CFTC proposed a rule that would expressly define event contracts, including those based on sports, as swaps. It is a proposal open for comment, not a rule in force. New Jersey's position, in its petition, is that sports bets are not swaps and that the CFTC's exclusive jurisdiction is over other federal agencies, not over the states' power to regulate gambling (pp.3-4).

New Jersey's petition counts at least 39 lawsuits across 20 states over these markets, and the only New Jersey case in its footnoted list is Kalshi's own federal suit (p.15 n.1). We found no New Jersey enforcement step against Kalshi after the March 27, 2025 letter. The district court's docket could not be read for this check, so we could not determine what has happened in the trial court since the appeal.

Two bills address prediction markets without naming Kalshi. Senate Bill S3692, introduced February 24, 2026, "Prohibits operation of certain prediction markets in this State; authorizes athletic event markets operating in compliance with sports wagering regulations," in its synopsis's words. Committee substitutes for S4447 and A5336 would impose "a 9 percent surtax on allocated taxable net income under the Corporation Business Tax or on the gross income derived from the operation of a prediction market operator under the Gross Income Tax," paid by prediction market operators on top of those taxes, with no credits allowed. The Senate and Assembly budget committees each reported a substitute favorably on June 28, 2026 (Senate committee statement). The surtax was reported from committee on June 28; we could not determine passage, and the bill documents we could read show no floor vote or signature. S3692's text we read is the introduced version, and we could not determine any later action on it. The statements give no effective date. The surtax would be paid by operators, not traders, and the statements do not mention Kalshi or the federal case.

We found no New Jersey order or lawsuit aimed at a broker that offers Kalshi's contracts. In the federal case, Kalshi told the court in a declaration that one of its partners had already chosen not to list Kalshi's contracts in New Jersey because of a similar cease-and-desist letter it received from New Jersey authorities (opinion pp.13-14). The opinion does not name the partner, and we could not determine who it is or whether that has changed.

Nothing in the case addresses federal tax, and a state gambling case isn't a ruling on federal income tax. Gains and losses on past trades are reported on a federal return; how Realize rebuilds them from Kalshi's data is in how to file Kalshi taxes. Every other state's status is on the Kalshi legal page.