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New Jersey is leaning on a fresh Massachusetts court win to add fresh ammo to its court battle with prediction market operator Kalshi, the federally regulated prediction market that’s been pushing sports event contracts into states that already have sports betting rules on the books.
This move comes just a few days after a Massachusetts judge granted the state a preliminary injunction that would stop Kalshi from offering sports-related event contracts there, siding with the argument that the company is operating without the kind of sports betting license Massachusetts requires.
New Jersey is trying to undo a lower-court order that has, for now, stopped state regulators from enforcing New Jersey gaming laws against Kalshi while the case plays out.
New Jersey wants that protective order lifted
On January 22, New Jersey’s acting attorney general, Jennifer Davenport, sent the Third Circuit a short notice highlighting the Massachusetts ruling as new, relevant authority. According to reports, this is a rather common appellate move: you don’t rewrite your whole brief, you simply tell the court, “Here’s a new decision you should factor in.”
With this, New Jersey is telling the appeals court: look, Massachusetts took a hard look at the same “federal law overrides states” argument and didn’t buy it.
New Jersey’s timing tracks with how fast this Kalshi litigation is moving across the country. Courts in multiple states are being asked the same core question: if a platform is regulated by the Commodity Futures Trading Commission (CFTC) as an exchange, can it offer sports-related event contracts nationwide without following the licensing rules that sportsbooks live under?
Massachusetts: a state judge calls the state’s licensing interest “public health and safety”
The Massachusetts decision New Jersey is citing on came down January 20. Suffolk County Superior Court Judge Christopher Barry-Smith said he would grant Massachusetts Attorney General Andrea Campbell a preliminary injunction that blocks Kalshi from offering sports event contracts in the state without the license Massachusetts requires for sports wagering.
This ruling pushes back on the idea that federal derivatives oversight automatically wipes out state gambling rules.
The judge said Kalshi took an overly broad view of federal law and that Congress did not mean to erase state authority over gambling regulation.
New Jersey’s point: Massachusetts didn’t see a clash with federal derivatives oversight
New Jersey highlighted Massachusetts language saying Congress did not intend to “displace traditional state police powers, such as gambling regulation,” and that Congress only preempted certain state gaming laws where it said so directly.
On the larger subtext, New Jersey told the Third Circuit the New Jersey district court decision currently shielding Kalshi is out on an island, because other courts have been skeptical of Kalshi’s attempt to treat sports event contracts as a “states can’t touch this” product.
New Jersey, and other states, awaits Third Circuit’s decision
The Third Circuit’s decision will determine whether New Jersey regulators can restart enforcement while the lawsuit continues, or whether Kalshi keeps operating under federal court protection in the state.
Either way, Massachusetts is now the decision every state wants to wave around in court: a judge saying, in plain terms, that a sports-wagering product sold to the public can still trigger state licensing rules even if it’s offered through a federally regulated exchange.
Source: Reuters
