Kalshiex, LLC v. Mary Jo Flaherty

U.S. COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 25-1922
KALSHIEX, LLC
v.
MARY JO FLAHERTY; DIVISION OF GAMING ENFORCEMENT;
JAMES T. PLOUSIS; ALISA COOPER; CASINO CONTROL
COMMISSION; MATTHEW J. PLATKIN; JOYCE MOLLINEAUX
MARY JO FLAHERTY; MATTHEW J. PLATKIN,
Appellants
_____________________________
Appeal from the U.S. District Court, D.N.J.
Judge Edward S. Kiel, No. 1:25-cv-02152
Before: CHAGARES, Chief Judge, PORTER, and
ROTH, Circuit Judges
Argued Sep. 10, 2025; Decided Apr. 6, 2026 _____________________________
OPINION OF THE COURT
PORTER, Circuit Judge.
KalshiEX LLC (“Kalshi”) moved preliminarily to
enjoin the New Jersey Division of Gaming Enforcement from
enforcing state law against Kalshi’s sports-related event con-
tracts. The District Court granted Kalshi’s motion. Because
Kalshi has demonstrated a reasonable chance of success on its

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argument that the Commodity Exchange Act (“the Act”)
preempts otherwise applicable state law, we will affirm.
I
Kalshi is a financial services company that operates a
designated contract market (“DCM”) licensed by the
Commodity Futures Trading Commission (“CFTC”), on which
it offers event contracts, a type of derivative. Derivatives are
financial tools that mitigate risk and derive their value from
some underlying asset. Kalshi’s event contracts “identify an
event with multiple possible outcomes, a payment schedule for
those outcomes, and an expiration date. The contract’s value is
determined by market forces, which means its price fluctuates
from the time of its creation to its expiration based on percep-
tions about the event’s likelihood.” Appellee’s Brief at 9.
Kalshi customers can buy and trade on predictions about all
sorts of events: political elections, movie box office numbers,
and even the weather. For example, an event contract could ask
whether an earthquake will take place in a certain city on a cer-
tain date. A purchaser may then trade on either “yes” or “no.”
If the earthquake does occur in the city on the date, the “yes”
positions would be paid out.
In December 2024, one of Kalshi’s competitors started
offering event contracts on the outcome of sports events. A
month later, Kalshi began offering the same type of event con-
tract. Two months later, New Jersey sent Kalshi a cease-and-
desist letter stating that Kalshi’s listing of sports-related event
contracts violates New Jersey’s constitution and gambling laws
that prohibit betting on collegiate sports. It threatened to seek
“any measures available under New Jersey law” if Kalshi did
not promptly end its sports betting activities in New Jersey and
void any existing wagers. Joint Appendix (“J.A.”) at 38.

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Violations of the applicable law are punishable as “crime[s] of
the fourth degree” subject to fines up to $100,000. N.J. Stat.
Ann. §§ 5:12A-11(c), 2C:43-2.
Kalshi immediately commenced this action in the
United States District Court for the District of New Jersey,
seeking preliminarily to enjoin New Jersey from enforcing its
law. The District Court granted the injunction, finding that
Kalshi had a reasonable likelihood of success, faced irreparable
harm, and that the public interest is not served by enforcing an
unconstitutional law. New Jersey appealed.
II
The District Court had jurisdiction under 28 U.S.C.
§ 1331. We have jurisdiction under 28 U.S.C. § 1292(a)(1).
We review the District Court’s “findings of fact for
clear error, its conclusions of law de novo, and the ultimate
decision granting the preliminary injunction for an abuse of
discretion.” Mallet and Co. Inc. v. Lacayo, 16 F.4th 364, 379
n.17 (3d Cir. 2021) (quoting Bimbo Bakeries USA, Inc. v.
Botticella, 613 F.3d 102, 109 (3d Cir. 2010)). Preliminary
injunctions are governed by a well-established four-part test.
The first two are the most important threshold factors:
“likelihood of success on the merits” and whether the party
seeking the injunction “is more likely than not to suffer
irreparable harm in the absence of preliminary relief.” Id. at
380 (quoting Reilly v. City of Harrisburg, 858 F.3d 173, 179
(3d Cir. 2017)). If those two factors are met, the court balances
them along with two others: the balance of equities and the
public interest. Del. State Sportsmen’s Ass’n v. Del. Dep’t of
Safety & Homeland Sec., 108 F.4th 194, 202 (3d Cir. 2024).
Factors three and four “merge when the Government is the

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opposing party.” Id. at 205 (quoting Nken v. Holder, 556 U.S.
418, 435 (2009)).
III
Kalshi has met its burden for preliminary injunctive
relief. The parties contest whether the CFTC’s exclusive juris-
diction over DCMs as conferred by the Act preempts New
Jersey gambling laws and the state constitution’s prohibition
on collegiate sports betting. New Jersey frames the issue
broadly (regulating all sports gambling) rather than narrowly
(regulating trading on federally designated contract markets).
The text of the Act suggests that the narrow framing is the bet-
ter reading. The Act preempts state laws that directly interfere
with swaps traded on DCMs. Kalshi’s sports-related event con-
tracts are swaps traded on a CFTC-licensed DCM, so the CFTC
has exclusive jurisdiction. The District Court did not abuse its
discretion by finding that Kalshi would more likely than not
suffer irreparable harm absent the preliminary injunction and
that the remaining preliminary injunction factors also weigh in
favor of Kalshi.
A
The parties’ arguments focus on the first factor: likeli-
hood of success on the merits. For that factor, the moving party
must show that “there is a reasonable chance, or probability, of
winning.” Mallet, 16 F.4th at 380 (citation modified). “Reason-
able” does not mean “more likely than not,” but it does mean
“significantly better than negligible.” Id. The District Court
concluded that Kalshi demonstrated a likelihood of success on
its argument that the Act preempts New Jersey law from reach-
ing into CFTC-licensed DCMs. We agree.

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1
The Act, first passed in 1936, regulates derivatives mar-
kets. At first, the law did not preempt state regulation in the
area. But that resulted in a patchwork of state regulations, so
Congress amended the Act in 1974 and created the CFTC to
oversee trading on federally designated “contract market[s].” 7
U.S.C. § 2(a)(1)(A). The CFTC has an array of powers to
investigate and prohibit contracts. Initially, there is a long and
involved process before the CFTC will officially “designate” a
prospective contract market. See generally 7 U.S.C. § 7. Once
designated, a DCM does not need pre-approval before listing
contracts, although it must self-certify compliance with the
applicable laws and regulations. 7 U.S.C. § 7a-2(c)(1).
The 1974 amendments also expanded the Act’s reach
from just agricultural products to all “goods and articles . . .
and all services, rights, and interests . . . in which contracts for
future delivery are presently or in the future dealt in.” 7 U.S.C.
§ 1a(9). And in 2000, Congress expanded the Act to qualifying
events, defined as an “occurrence” or “contingency” that is
“beyond the control of the parties to the . . . transaction; and
associated with a financial, commercial, or economic conse-
quence.” 7 U.S.C. §§ 1a(19)(iv), (iv)(I)–(II).
The Dodd-Frank Act of 2010 amended the Act again,
this time adding a new class of futures known as “swaps” and
expanding the CFTC’s exclusive jurisdiction “with respect to
accounts, agreements . . . and transactions involving swaps or
contracts of sale of a commodity for future delivery . . . traded
or executed on a [DCM.]” 7 U.S.C. § 2(a)(1)(A). The Act
defines “swap” to include “any agreement, contract, or trans-
action . . . that provides for any . . . payment[ ] or delivery . . .
that is dependent on the occurrence, nonoccurrence, or the

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extent of the occurrence of an event or contingency associated
with a potential financial, economic, or commercial conse-
quence.” 7 U.S.C. §§ 1a(47)(A), (A)(ii). In other words,
“swap” includes event contracts.1
The Dodd-Frank Act also implemented a “[s]pecial
rule” for event contracts, giving the CFTC discretionary power
to review and prohibit six categories of contracts if it concludes
they are “contrary to the public interest.” 7 U.S.C. §§ 7a-
2(c)(5)(C), (C)(i). Relevant here, those categories include con-
tracts that involve “gaming” or “other similar activity deter-
mined by the [CFTC], by rule or regulation, to be contrary to
the public interest.” 7 U.S.C. §§ 7a-2(c)(5)(C)(i)(V)–(VI). The
CFTC has codified this power in a regulation, 17 C.F.R.
§ 40.11, but it has not yet acted to review or prohibit any
sports-related event contracts. Cf. Prediction Markets, 91 Fed.
Reg. 12516, 12521 (proposed March 16, 2026) (inviting com-
ment on the scope and public interest implications of “gam-
ing,” and “sports competition”).
Although the Act grants the CFTC exclusive regulatory
jurisdiction over event contracts, there are two savings clause
carveouts that permit state regulation in certain areas not cov-
ered by the Act. The first says: “Except as hereinabove pro-
vided, nothing contained in this section shall . . . supersede or
limit the jurisdiction at any time conferred on . . . other regula-
tory authorities under the laws of the United States or of any
State.” 7 U.S.C. § 2(a)(1)(A) (emphasis added). And the sec-
1 The CFTC recently published an advance notice of proposed
rulemaking regarding “event contract derivatives traded on
markets commonly referred to as ‘prediction markets,’ ” which
include sporting events contracts. Prediction Markets, 91 Fed.
Reg. 12516, 12516–17 & n.9 (proposed March 16, 2026).

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ond follows: “Nothing in this section shall supersede or limit
the jurisdiction conferred on courts of the United States or any
State.” Id.
2
a
In 2020, the CFTC certified Kalshi’s online exchange
as a DCM after a nine-month review period. See KalshiEX LLC
v. CFTC, No. 23-cv-3257, 2024 WL 4164694, at *4 (D.D.C.
Sept. 12, 2024) (“In 2020, the CFTC authorized Kalshi . . . to
list event contracts for public trading as a DCM.”). About five
years later, Kalshi began offering sports-related event contracts
on its DCM exchange. Kalshi self-certified compliance with
the applicable laws and regulations, so those event contracts
were presumptively approved under federal law. See 7 U.S.C.
§ 7a-2(c)(1). To date, the CFTC has not determined that
Kalshi’s sports-related event contracts are contrary to the pub-
lic interest. See 7 U.S.C. § 7a-2(c)(5)(C)(ii); 17 C.F.R. § 40.11.
And though the dissent labels Kalshi’s event contracts
“gaming contracts” and argues that they fall under the “special
rule,” Dissent at 17–18, the CFTC has chosen not to enforce its
regulation against the type of sports-related event contracts at
issue here. In fact, it has already certified many “sporting
events” contracts for listing. 91 Fed. Reg. at 12517 n.9 (citing
Designated Contract Market Products, CFTC,
https://perma.cc/93Y2-K6ZT (last visited Mar. 17, 2026)).
New Jersey argues that Kalshi’s event contracts are not
“swaps” covered by the Act “because the outcome of a sports
game is not ‘joined or connected’ with a financial, economic,
or commercial instrument or measure.” Appellant’s Brief at

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23–24. But its proposed “joined or connected” requirement
raises the bar beyond what the Act requires.
As always with statutory interpretation, “we begin with
the text.” United States v. Johnson, 114 F.4th 148, 153 (3d Cir.
2024). The Act provides that the relevant event or occurrence
need only be “associated with a potential financial, economic,
or commercial consequence.” 7 U.S.C. § 1a(47)(A), (A)(ii). As
the dissent concedes, “[a] plain reading of the Act’s text sug-
gests that Kalshi’s sports-event contracts fit comfortably
within the statutory definition.” Dissent at 2. That is correct.
The outcome of a sports event certainly can be associated with
a potential financial, economic, or commercial consequence.
The District Court did not clearly err when it identified numer-
ous affected stakeholders, including sponsors, advertisers, tel-
evision networks, franchises, and local and national communi-
ties. The analysis need not go further. Because Kalshi’s sports-
related event contracts are traded on a CFTC-licensed DCM
and depend on event outcomes associated with economic con-
sequences, they fit within the Act’s definition of “swaps”
subject to the CFTC’s jurisdiction. See 7 U.S.C.
§§ 2(a)(1)(A), 1a(47)(A)(ii).
New Jersey and the dissent “pile inference upon infer-
ence” and postulate that anything from bingo games to ping-
pong matches will fall under the CFTC’s jurisdiction. See
United States v. Lopez, 514 U.S. 549, 567 (1995); see also
Transcript of Oral Argument at 18 (lines 12–22), KalshiEX,
LLC v. Flaherty, et al., No. 25-1922 (Sept. 24, 2025). But
Kalshi makes no such claim, and the District Court does not so
broadly hold. In such far-fetched scenarios, Congress’s express
delegation to the CTFC and the Securities and Exchange
Commission to “further define” swaps would prove useful. 15
U.S.C. § 8302(d)(1); see, e.g., Further Definition of “Swap,”

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77 Fed. Reg. 48208, 48246 (Aug. 13, 2012) (excluding certain
“consumer transactions” from the statutory definition).
b
New Jersey contends that the contracts can be regulated
by the states and are not preempted by the Act. Under the
Supremacy Clause, “federal law is supreme in case of a conflict
with state law.” Murphy v. Natl. Collegiate Athletic Ass’n, 584
U.S. 453, 477 (2018); U.S. Const. art. VI, cl. 2. It can preempt
state law either expressly or impliedly. Klotz v. Celentano
Stadtmauer & Walentowicz LLP, 991 F.3d 458, 463 (3d Cir.
2021). Implied preemption falls into two categories, field or
conflict preemption, although the Supreme Court has recog-
nized that “the categories of preemption are not rigidly dis-
tinct” and that “field preemption may be understood as a spe-
cies of conflict preemption.” Crosby v. Nat’l Foreign Trade
Council, 530 U.S. 363, 372 n.6 (2000) (citation modified). We
hold that both field and conflict preemption apply.
i
The District Court considered whether the Act
impliedly preempted state regulation of DCMs and concluded
that “at the very least field preemption applies.” J.A. 11–14.
We agree. Kalshi has demonstrated a reasonable chance of suc-
cess in showing that the text of the Act preempts otherwise

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applicable state laws that purport to regulate sports-related
event contracts on CFTC-licensed DCMs.2
As we have recognized, “all preemption arguments[ ]
must be grounded in the text and structure of the [federal] stat-
ute at issue.” Klotz, 991 F.3d at 463 (quoting Kansas v. Garcia,
589 U.S. 191, 208 (2020)). Field preemption sounds a lot like
express preemption—“it concerns a clash between a constitu-
tional exercise of Congress’s legislative power and conflicting
state law.” Murphy, 584 U.S. at 479. That conflicting state law
is field preempted when “federal law occupies a ‘field’ of reg-
ulation ‘so comprehensively that it has left no room for supple-
mentary state legislation.’ ” Id. (quoting R.J. Reynolds Tobacco
Co. v. Durham Cnty, 479 U.S. 130, 140 (1986); see also
Sikkelee v. Precision Airmotive Corp., 822 F.3d 680, 688 (3d
Cir. 2016).
Here, the Act grants the CFTC exclusive jurisdiction
over “swaps . . . traded or executed on a [DCM],” which
include Kalshi’s sports-related event contracts. 7 U.S.C.
§ 2(a)(1)(A); see supra § III.A.2.a. The Act does have a limit-
ing principle: it “shall [not] supersede or preempt . . . the
application of any Federal or State statute . . . to any transac-
tion . . . that is not conducted on or subject to the rules of a
registered entity.” 7 U.S.C. § 16(e)(1)(B)(i) (emphasis added).
But here, registered entities include DCMs, so that limiting
principle does not apply. 7 U.S.C. § 1a(40)(A).
2 We need not address the parties’ extra-textual arguments
related to whether the Act preempts all state gambling
regulation, because Kalshi does not argue that the Act
preempts all state gambling regulation.

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The dissent contends that DCM trading is a subfield of
futures trading, and that the Act is not “sufficiently compre-
hensive . . . to preclude enforcement of state laws on the same
subject.” Dissent at 9. But as our sister circuits have held, the
Act preempts state law purporting to regulate futures trading.
See, e.g., F.T.C. v. Ken Roberts Co., 276 F.3d 583, 591–92
(D.C. Cir. 2001); Am. Agric. Movement, Inc. v. Bd. of Trade of
Chi., 977 F.2d 1147, 1157 (7th Cir. 1992); Leist v. Simplot, 638
F.2d 283, 322 (2d Cir. 1980). This is consistent with Con-
gress’s longtime regulation of futures trading dating back to
the early twentieth century. See Bd. of Trade of Chi. v. Olsen,
262 U.S. 1, 43 (1923). Because Kalshi’s sports-related event
contracts are swaps under the Act, the District Court properly
defined the scope of field preemption as the regulation of trad-
ing on a DCM (a form of futures trading) rather than as gam-
bling (a broader and traditionally state-regulated field).3 See
Schaffner v. Monsanto Corp., 113 F.4th 364, 392 (3d Cir.
2024) (“[O]ur understanding of the scope of a pre-emption stat-
ute . . . must rest primarily on a fair understanding of congres-
sional purpose . . . [drawn] primarily from the text of the stat-
ute and from its surrounding framework.”) (citation modified);
Sikkelee, 822 F.3d at 689 (cautioning that, when assessing
preemption, courts should avoid “interpreting the scope of the
preempted field too broadly”). Thus, the District Court did not
3 While there are two savings clauses in the Act, those do not
mean that “Congress decided to allow room for state law” on
futures trading. Dissent at 13. Unlike other statutes that allow
for states to impose stricter standards or other coterminous reg-
ulation, the Act has no such allowance and preserves
jurisdiction only for state common-law actions. See infra
§ III.A.2.c.

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err in holding that New Jersey law is field preempted by the
Act.
ii
Though the District Court limited its analysis to field
preemption, conflict preemption also prohibits New Jersey
from regulating sports-related event contracts on CFTC-
licensed DCMs. See TD Bank N.A. v. Hill, 928 F.3d 259, 276
(3d Cir. 2019) (“[W]e may affirm on any ground supported by
the record . . . .”).
Conflict preemption “occurs when a state law conflicts
with federal law such that compliance with both state and fed-
eral regulations is impossible, or when a challenged state law
stands as an obstacle to the accomplishment and execution of
the full purposes and objectives of a federal law.” Sikkelee, 822
F.3d at 688 (citation modified); see also Silkwood v. Kerr-
McGee Corp., 464 U.S. 238, 248 (1984).
To determine whether New Jersey’s laws and constitu-
tion stand as an obstacle to the Act, we first determine
Congress’s “full purposes and objectives” of the Act as evi-
denced by “the text and structure of the [federal] statute at
issue.” Klotz, 991 F.3d at 463 (citation omitted). Here, there’s
little doubt that the Act is “a comprehensive regulatory struc-
ture to oversee the volatile and esoteric futures trading com-
plex.” Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran,
456 U.S. 353, 356 (1982) (citation omitted). As detailed above,
Congress created the CFTC and amended the Act to do away
with the patchwork of state regulations and bring futures trad-
ing on DCMs under the exclusive jurisdiction of the CFTC.
Supra § III.A.1.

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Second, we ask whether the state law “stands as an
obstacle” to those objectives. Sikkelee, 822 F.3d at 688 (cita-
tion modified). It does. Allowing New Jersey to enforce its
gambling laws and state constitution would create an obstacle
to executing the Act because such state enforcement would
prohibit Kalshi, which operates a licensed DCM under the
exclusive jurisdiction of the CFTC, from offering its sports-
related event contracts in New Jersey. This state regulation is
exactly the patchwork that Congress replaced wholecloth by
creating the CFTC. Because that prohibition directly conflicts
with the full purposes and objectives of the Act, we need not
determine whether it would be impossible for Kalshi to comply
with both state and federal regulations. See Am. Agric.
Movement, Inc., 977 F.2d at 1156 (holding that state laws
“directly affect[ing] trading on or the operation of a futures
market” are conflict preempted by the Act).
iii
Our dissenting colleague emphasizes the “strong pre-
sumption against preemption in areas of the law that States
have traditionally occupied.” Sikkelee, 822 F.3d at 687. But
neither “[b]asic abductive reasoning” nor construing “silence”
one way or the other can overcome the Act’s text. Dissent at 7,
21. Even accepting the dissent’s premise that states have long

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regulated gambling,4 the text preempts state gambling laws that
seek to regulate futures trading, i.e., Kalshi’s sports-related
event contracts traded on a DCM under the exclusive jurisdic-
tion of the CFTC. 7 U.S.C. § 16(e)(1)(B)(i). Again, the federal
government has regulated the derivatives market for over a
century. See Olsen, 262 U.S. at 43 (upholding the constitution-
ality of the Grain Futures Act, predecessor to the Act). And it
delegated that regulation to the CFTC, which has expertise in
swaps like event contracts. See 7 U.S.C. §§ 1a(47)(A), (A)(ii);
2(a)(1)(A); 91 Fed. Reg. at 12517 (noting that the CFTC has
regulated event contracts since at least 2008); Michael S. Selig,
Chairman, Commodity Futures Trading Comm’n, Remarks:
The Next Phase of Project Crypto: Unleashing Innovation for
the New Frontier of Finance (Jan. 29, 2026) (“[T]he [CFTC]
has the expertise and responsibility to defend its exclusive
jurisdiction over commodity derivatives”).
c
New Jersey argues that the Act’s savings clause carve-
outs preserve state jurisdiction over sports-related event con-
tracts on CFTC-licensed DCMs. But the clear text of the Act
says otherwise. Both carveouts follow the Act’s grant of CFTC
exclusive jurisdiction over swaps. The first preserves state
4 States have long regulated intrastate gambling, but not
interstate gambling. See Churchill Downs Tech. Initiatives Co.
v. Mich. Gaming Control Bd., 162 F.4th 631, 641 n.5 (6th Cir.
2025) (“[S]ince the regulation of interstate gambling isn’t a
traditional area of state regulation, the presumption against
preemption doesn’t apply.”) (emphasis in original); see also
Wire Act of 1961, 18 U.S.C. § 1084 (federal gambling law pro-
hibiting the interstate wire transmission of bets or wagers on
any sporting event or contest).

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jurisdiction “except as hereinabove provided.” 7 U.S.C.
§ 2(a)(1)(A) (emphasis added). That prefatory clause indicates
that swaps fall under the CFTC’s exclusive jurisdiction. And
as the District Court recognized, the second carveout preserves
jurisdiction for state courts in common-law actions but does
not contravene the grant of CFTC’s exclusive jurisdiction.5 Id.
Congress gave the CFTC exclusive jurisdiction over
trades on DCMs, provided for continued state regulation of
trades conducted off DCMs, and recognized that while event
contracts could involve gaming, the CFTC has discretionary
power to review and prohibit those contracts. Thus, it was rea-
sonable for the District Court to conclude that Kalshi was
5 We agree with other circuits that carveouts for state actions
like negligence and fraud do not undermine the Act’s
preemptive regulation of commodity futures. See, e.g., Kerr v.
First Commodity Corp. of Boston, 735 F.2d 281, 288 (8th Cir.
1984) (“[T]he continued existence of common law fraud
actions permitting punitive damage awards does not conflict
with the regulatory scheme established by the Act. Congress
recognized this by including [the] savings clause . . . .”); Kotz
v. Bache Halsey Stuart, Inc., 685 F.2d 1204, 1207 (9th Cir.
1982) (“Congress clearly intended to create a single agency to
regulate the field [of futures trading] . . . It does not follow,
however, that creation of a central regulatory authority [the
CFTC] means abolition of common law rights, unless their
retention would render the regulatory scheme ineffective.”);
United States v. Brien, 617 F.2d 299, 310 (1st Cir. 1980)
(“While courts have held that the CFTA preempts state regula-
tion of commodities futures, it has also been held that the
CFTA does not preempt state general antifraud statutes.”)
(citation omitted).

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likely to succeed in showing that the Act preempts New Jersey
law from reaching into Kalshi’s CFTC-licensed DCM to ban
sports-related event contracts.6
B
The remaining preliminary-injunction factors, on bal-
ance, tip the scale in favor of Kalshi. As for irreparable harm,
the moving party must demonstrate “potential harm which can-
not be redressed by a legal or an equitable remedy following a
trial.” Ramsay v. Nat’l Bd. of Med. Exam’rs, 968 F.3d 251, 262
(3d Cir. 2020) (quotation omitted). New Jersey threatened
Kalshi with civil and criminal penalties. See Morales v. Trans
World Airlines, Inc., 504 U.S. 374, 381 (1992) (“When
enforcement actions are imminent . . . there is no adequate
remedy at law.”). The District Court did not abuse its discretion
when it held that, absent injunctive relief, Kalshi would suffer
6 Other courts considering this question have also determined
that Kalshi’s sports-related event contracts on its DCM are sub-
ject to the exclusive jurisdiction of the CFTC. Kalshiex LLC v.
Orgel, No. 3:26-CV-00034, 2026 WL 474869, at *7 (M.D.
Tenn. Feb. 19, 2026) (“The court finds that Kalshi is likely to
succeed on the merits because sports event contracts are
“swaps” and conflict preemption applies.”); Blue Lake
Rancheria v. Kalshi Inc., No. 3:25-cv-6162, 2025 WL
3141202, at *7 (N.D. Cal. Nov. 10, 2025) (“Plaintiffs have not
shown the Court has jurisdiction to decide whether Kalshi’s
event contracts violate the [Act]. That decision belongs to the
[CFTC], which has ‘exclusive jurisdiction’ over its contract
markets.”); see also KalshiEX LLC v. Flaherty, No. 25-cv-
02152, 2025 WL 1218313, at *6 (D.N.J. Apr. 28, 2025) (“I am
persuaded that Kalshi’s sports-related event contracts fall
within the CFTC’s exclusive jurisdiction . . . .”).

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economic and reputational harm, including loss of business and
goodwill. See Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700,
726 (3d Cir. 2004) (“Grounds for irreparable injury include
loss of control of reputation, loss of trade, and loss of good
will.”). The District Court pointed to a concrete example of lost
business: a trading partner refused to list Kalshi event contracts
in New Jersey because of a similar cease-and-desist letter.
The District Court also did not abuse its discretion by
balancing the equities and public interest factors in favor of
Kalshi. If the Act preempts New Jersey law, then the public
interest is best served by enforcing the Act. See N.J. Retail
Merchs. Ass’n v. Sidamon-Eristoff, 669 F.3d 374, 389 (3d Cir.
2012) (“[T]he public interest [is] not served by the enforcement
of an unconstitutional law.”). Because we agree with the Dis-
trict Court that Kalshi has shown likelihood of success on its
argument that the CFTC’s exclusive jurisdiction over DCMs
preempts New Jersey gambling laws and the state constitution,
we conclude that the public interest factors tip toward Kalshi.
* * *
Because the likelihood-of-success and irreparable-harm
factors favor Kalshi, and the last factors largely turn on a
determination of the merits, the District Court did not abuse its
discretion by granting the preliminary injunction. We will
affirm.

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18
Matthew J. Platkin
Liza B. Fleming
Stephen Ehrlich [ARGUED]
Emily M. Bisnauth
Vivek N. Mehta
Office of the New Jersey Attorney General
Counsel for Appellants
Andrew L. Schlafly
Counsel for Amicus Appellants Stop Predatory
Gambling, Texans Against Gambling, and Association
of American Physicians and Surgeons
Elizabeth A. Bower
Joseph H. Webster
Hobbs Straus Dean & Walker LLP
Scott D. Crowell
Crowell Law Offices
Michael C. Hoenig
Yuhaaviatam of San Manuel Nation
Counsel for Amicus Appellant Indian Gaming
Association, et al.
Kevin F. King
Eli Nachmany
Covington & Burling LLP
Counsel for Amicus Appellant American Gaming
Association

-- 18 of 41 --

19
Zachery P. Keller
Office of Attorney General of Ohio
Office of the Solicitor General
Heidi P. Stern
Jessica E. Whelan
Office of Attorney General of Nevada
Counsel for Amicus Appellants 34 States, District of
Columbia, and Northern Mariana Islands
Alexander H. Loomis
Derek Shaffer
Quinn Emanuel Urquhart & Sullivan, LLP
Counsel for Amicus Appellant Casino Association of
New Jersey Inc.
Neal K. Katyal
William E. Havemann [ARGUED]
Samantha K. Ilagan
Gurbir S. Grewal
Milbank LLP
Counsel for Appellee
Tyler R. Green
Consovoy McCarthy PLLC
Counsel for Amicus Appellee Paradigm Operations LP
Michael M. Rosensaft
Katten Muchin Rosenman LLP
Counsel for Amicus Appellee Bitnomial Exchange LLC

-- 19 of 41 --

20
Megan Barbero
Kyle Keraga
Carlos H. Salguero, Jr.
Venable LLP
Counsel for Amicus Appellees Max Baucus, Blanche L.
Lincoln, Saxby Chambliss, K. Michael Conaway, Collin
Peterson, Cheri Bustos, and Cindy Axne
Scott D. Brenner
Parlatore Law Group, LLP
Counsel for Amicus Curiae New Finance Institute

-- 20 of 41 --

ROTH, Circuit Judge, dissenting.
When I went on the Kalshi page for the Carolina
Panthers vs. Tampa Bay Buccaneers football game scheduled
for January 3, 2026, I could have bet on the winner (game
outcome).1 I could have also bet on whether I believed Tampa
Bay would win by more than 2.5 points (point spread), whether
the two teams would collectively score 45 or more points
(game props), or whether former Tampa Bay wide receiver
Mike Evans would score a touchdown (player props).2 These
offerings are virtually indistinguishable from the betting
products available on online sportsbooks, such as DraftKings
and FanDuel. While online sportsbooks are regulated by states
such as New Jersey, Kalshi asserts that it is outside the bounds
of state regulation because it does not offer gambling products.
Instead, Kalshi contends its offered sports-event contracts are
swaps, subject to the exclusive jurisdiction of the CFTC. The
Majority agrees, holding that Kalshi’s registration as a DCM
and branding of its wagers as sports-event contracts are acts of
alchemy that transmute its products from sports gambling to
futures trading. I see Kalshi’s actions as a performative sleight
meant to obscure the reality that Kalshi’s products are sports
gambling. Because Kalshi is facilitating gambling, it can be
subjected to state regulation.
The Majority’s preemption analysis fails to adequately
consider the presumption against preemption, which applies
1 Carolina at Tampa Bay, KALSHI,
https://kalshi.com/markets/kxnflgame/professional-football-
game/kxnflgame-26jan04cartb [https://perma.cc/ZG4E-
RPAH?type=image] (last visited Jan. 2, 2026).
2 Id.

-- 21 of 41 --

2
with special force here because gambling has traditionally been
regulated by the states.3 I believe that when taking into account
the presumption against preemption, the application of New
Jersey’s gambling laws to Kalshi’s sports-event contracts is not
field preempted. I would also hold that conflict preemption
does not apply because Kalshi is not precluded from complying
with both New Jersey and federal law, and because New
Jersey’s regulations do not undermine the congressional
objectives behind the Act. Accordingly, because Kalshi cannot
demonstrate a likelihood of success on the merits and show that
New Jersey’s gambling laws are federally preempted, I
respectfully dissent.
I.
Before I delve into the preemption analysis, I would like
to briefly address the Majority’s holding that Kalshi’s sports-
event contracts fall within the Act’s definition of swaps. Both
parties make compelling arguments in support of their
respective positions. On the one hand, Kalshi is correct that
the statutory definition of swaps is broad, with the Act defining
swaps as “any agreement, contract, or transaction . . . that
provides for any purchase, sale, payment, or delivery . . . that
is dependent on the occurrence, nonoccurrence, or the extent
of the occurrence of an event or contingency associated with a
potential financial, economic, or commercial consequence.”4
A plain reading of the Act’s text suggests that Kalshi’s sports-
event contracts fit comfortably within the statutory definition.
On the other hand, we should not read statutes literally
“if reliance on that language would defeat the plain purpose of
3 See infra Section II.
4 7 U.S.C. § 1a(47)(A).

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3
the statute,”5 or would “def[y] rationality.”6 As New Jersey
argues, Kalshi’s proffered definition would likely encompass
virtually every kind of wager that could exist, including classic
casino games and charity raffles. After all, even a bet over the
outcome of a friendly neighborhood ping pong match may
have a “potential financial . . . consequence” because one of
the bettors would reap a financial reward based on the match’s
outcome.7 Moreover, because the trading of swaps outside
DCMs is illegal under 7 U.S.C. § 2(e), any individual who
engages in gambling outside of a DCM would commit a felony
were we to take the definition of swaps to its logical extreme.
Congress could not have intended for such a rationality-
defying outcome.
The Majority contends that my concerns with the
potential consequences of Kalshi’s proffered swaps definition
are based on a pile of “inference upon inference,”8 but I rely on
no inferences whatsoever. I simply apply the definition to the
real world and articulate the ramifications as I see them. In any
event, because I would rule against Kalshi on the basis of
preemption,9 I need not—and will not—decide whether
Kalshi’s sports-event contracts fall within the statutory
definition of swaps. That said, as I have laid out above, the
question of whether sports-event contracts are swaps is a
thorny issue with the potential to radically upend the legal
5 Bob Jones Univ. v. United States, 461 U.S. 574, 586 (1983).
6 Riccio v. Sentry Credit, Inc., 954 F.3d 582, 588 (3d Cir. 2020)
(internal citation and quotation marks omitted).
7 7 U.S.C. § 1a(47)(A) (emphasis added).
8 Maj. Op. 8.
9 See infra Sections III and IV.

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4
landscape governing the gambling industry, and I am not
convinced the Majority’s analysis does this issue justice.
II.
Turning to preemption, I believe it is first important to
provide a brief overview of the presumption against
preemption, a bedrock principle of preemption law that the
Majority incorrectly believes to be inapplicable. Courts cannot
find preemption unless Congress’s “clear and manifest
purpose” was for the federal law to supersede “the historic
police powers of the States.”10 Preemption principles counsel
that a close call weighs against a finding of preemption. The
presumption against preemption applies with special force
when Congress has legislated in a field traditionally occupied
by the states.11
Throughout U.S. history, gambling regulation has been
largely left to the state legislatures.12 Courts have noted that
10 Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947).
11 Altria Grp., Inc. v. Good, 555 U.S. 70, 77 (2008) (citing
Medtronic, Inc. v. Lohr, 518 U.S 470, 485 (1996)).
12 See Ah Sin v. Wittman, 198 U.S. 500, 505–06 (1905) (“The
suppression of gambling is concededly within the police
powers of a state.”); WV Ass'n of Club Owners & Fraternal
Servs., Inc. v. Musgrave, 553 F.3d 292, 302 (4th Cir. 2009) (“It
is well recognized that regulating gambling is at the core of the
state's residual powers as a sovereign in our constitutional
scheme.”); Flynt v. Bonta, 131 F.4th 918, 932 (9th Cir. 2025)
(“Gambling does not involve an inherently national system of
regulation, given the states’ long-understood authority in this
area.”).

-- 24 of 41 --

5
gambling is a potentially harmful “vice activity,”13 which
states may regulate under their police powers to promote the
“welfare, safety, and morals” of their citizens.14 While federal
gambling laws exist, they generally supplement state laws by
targeting areas outside state jurisdiction, such as U.S. territorial
waters,15 Native American lands,16 and the channels and
instrumentalities of interstate commerce.17 These federal laws
also contain non-preemption provisions allowing for state
gaming regulations.18 Congress in 1978 summarized the
federal-state balance in gambling laws as follows:
[T]he States should have the primary
responsibility for determining what forms of
gambling may legally take place within their
borders; the Federal Government should prevent
interference by one State with the gambling
policies of another, and should act to protect
identifiable national interests; and in the limited
area of interstate off-track wagering on
horseraces, there is a need for Federal action to
ensure States will continue to cooperate with one
another in the acceptance of legal interstate
13 Greater New Orleans Broad. Ass’n v. United States, 527
U.S. 173, 185 (1999).
14 Artichoke Joe’s Cal. Grand Casino v. Norton, 353 F.3d 712,
737 (9th Cir. 2003).
15 18 U.S.C. §§ 1081–83 (Gambling Ship Act).
16 15 U.S.C. § 1175 (Johnson Act).
17 18 U.S.C. § 1084 (Wire Act).
18 See e.g., 18 U.S.C. §§ 1082(a), 1083(a) (Gambling Ships
Act); 15 U.S.C. § 1172(a) (Johnson Act); 18 U.S.C. § 1084(b)
(Wire Act).

-- 25 of 41 --

6
wagers.19
Several states allowed certain forms of sports betting
until Congress in 1992 passed the Professional and Amateur
Sports Protection Act (PASPA), which barred states from
authorizing sports betting.20 This federal prohibition on sports
betting continued until 2018, when the Supreme Court in
Murphy v. NCAA held that PASPA’s preemption provision was
unconstitutional and without effect.21 The Court explained that
“Congress can regulate sports gambling directly, but if it elects
not to do so, each State is free to act on its own.”22 Congress
did not, so states did. As of July 2025, nearly 40 states have
legalized sports gaming in some form or another. Many of
these states use gaming taxes to fund public programs, and
have adopted comprehensive regulatory schemes to protect the
public from gambling addiction.
Of course, if Kalshi is correct that its products are not
gambling, then discussion about the states’ preeminent role in
regulating gambling is moot. It is difficult, however, to take
Kalshi’s argument at face value when its marketing materials,
such as the Instagram posts below, routinely refer to its
products as “sports betting:”23
19 15 U.S.C. § 3001(a) (emphasis added).
20 See 28 U.S.C. §§ 3701–04.
21 Murphy v. NCAA, 584 U.S. 453, 479–80 (2018).
22 Id. at 486.
23 Casino Ass’n of New Jersey Br. at 24 (citing Dustin Gouker,
Ten Times Kalshi Said People Could Bet On Things, Event
Horizon (Apr. 3, 2025), https://tinyurl.com/5a6x8kan.

-- 26 of 41 --

7
Marketing materials such as these, coupled with the fact
that Kalshi’s sports related offerings are a dead ringer for the
products offered by state-regulated online sportsbooks, make it
difficult for me to accept the proposition that Kalshi is not
facilitating gambling. Basic abductive reasoning tells us that
if it looks like gambling, talks like gambling, and calls itself
gambling, it’s gambling.
The Majority believes the presumption against
preemption does not apply because federal law governs
interstate gambling. That fact is inapposite, however, because
New Jersey does not seek to regulate interstate gambling—it
only claims jurisdiction over Kalshi’s sports betting activity

-- 27 of 41 --

8
occurring within the state. The historical tradition of states
having the dominant interest in intrastate gambling regulations
means that our court must “start with the assumption that the
historic police powers of the States were not to be superseded
by the Federal Act”24 when applying the preemption analysis
to New Jersey’s gambling laws. As the party asserting
preemption, Kalshi bears the burden of overcoming this
presumption.
III.
The Majority holds that New Jersey’s gambling laws as
applied to Kalshi are field preempted because the Act grants
the CFTC exclusive jurisdiction over trading on DCMs. The
Majority believes the CFTC’s occupation of the field of DCM
trading gives it the sole authority to regulate Kalshi because it
is a DCM. There are two issues with the Majority’s holding.
First, the Majority assumes that the relevant field is trading on
DCMs when DCM trading is in fact better thought of as a
subfield of futures trading. Because the federal occupation of
a subfield cannot overcome the presumption against
preemption, the CFTC’s occupation of the subfield of DCM
trading is insufficient to preempt state gambling laws. Second,
the Majority inadequately addresses the fact that the Act
contains savings clauses, which are incompatible with field
preemption.
A.
Although I agree with the Majority that the Act’s text
indicates that federal law occupies the field of DCM trading, I
24 Medtronic, Inc., 518 U.S. at 485 (internal quotation mark
omitted).

-- 28 of 41 --

9
disagree with the Majority’s holding that DCM trading is the
relevant field for our preemption analysis. In fact, the Majority
does not bother with methodically determining the proper field
for preemption purposes and instead assumes that the pertinent
field is trading on DCMs because “Kalshi’s sports-related
event contracts are swaps under the Act.”25
The Majority is mistaken in doing so because
identifying the appropriate field is fundamental for this
analysis.26 Not all fields are created equal. For field
preemption to apply, the field must be “sufficiently
comprehensive” or “so dominant that the federal system will
be assumed to preclude enforcement of state laws on the same
subject.”27 Subjects where field preemption have been found
to apply include broad areas of law such as foreign affairs,
international relations, and immigration.28 DCM trading is not
the sort of comprehensive field where the federal interest is so
dominant that Congress intended for the “complete ouster of
state power.”29 Rather, DCM trading is a subfield of futures
25 Maj. Op. 11.
26 Kansas v. Garcia, 589 U.S. 191, 208 (2020) (“In order to
determine whether Congress has implicitly ousted the States
from regulating in a particular field, we must first identify the
field in which this is said to have occurred.”).
27 Farina v. Nokia Inc., 625 F.3d 97, 121 (3d Cir. 2010)
(citations omitted).
28 A. Scalia & B. Garner, Reading Law: The Interpretation of
Legal Texts 290, 291 (2013) (“Field preemption is much more
likely to be found when the federal statute deals with an area
that the federal government has traditionally controlled, such
as foreign affairs, international relations, and immigration.”).
29 DeCanas v. Bica, 424 U.S. 351, 357 (1976).

-- 29 of 41 --

10
trading, which the Supreme Court has noted is “a
comprehensive regulatory structure to oversee the volatile and
esoteric futures trading complex.”30
The CFTC’s occupation of the subfield of DCM trading
is insufficient to preempt state gambling laws because of the
presumption against preemption. When Congress gave the
CFTC jurisdiction over swaps, there was no “clear and
manifest purpose” for federal law to supersede states’ “historic
police powers” over gambling regulation.31 After all, the
CFTC has no expertise in the sports gaming industry.32 If
Congress wanted the CFTC to serve as a kind of national sports
gaming commission, it would not have stated its intention “in
so cryptic a fashion.”33
Both Kalshi and the Majority argue that the
presumption against preemption is inapplicable because “the
federal government has regulated the derivatives market for
over a century.”34 Yet, the presence of federal regulation,
however longstanding, “does not by itself defeat the
30 Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456
U.S. 353, 356 (1982).
31 Rice, 331 U.S. at 230.
32 See West Virginia v. EPA, 597 U.S. 697, 729 (2022) (“When
[an] agency has no comparative expertise in making certain
policy judgments, we have said, Congress presumably would
not task it with doing so.”) (internal quotation marks omitted).
33 FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120,
123 (2000).
34 Maj. Op. 14.

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11
application of the presumption.”35 The only federal law in this
area that touches on gaming is the Dodd-Frank Act’s “special
rule” for event contracts (Special Rule), which gives the CFTC
the authority to prohibit event contracts involving gaming.36
The Special Rule, however, has only existed since the passage
of Dodd-Frank in 2010, and can hardly be considered
longstanding. In addition, Dodd-Frank’s legislative history has
only a brief discussion of “gaming,”37 further highlighting the
lack of federal regulation in this field.
The question of whether the federal occupation of a
subfield can preempt state law, especially when the federal law
overlaps with an area traditionally dominated by the states,
cannot be answered by field preemption principles. Federal
law may fully occupy a discrete subfield while leaving adjacent
or overlapping fields to be governed under the conflict
35 Farina, 625 F.3d at 116. See also Wyeth v. Levine, 555 U.S.
555, 565 n.3 (2009) (applying presumption despite federal
regulations existing “for more than a century”).
36 7 U.S.C. § 7a-2(c)(5)(C)(i).
37 156 Cong. Rec. S5906–07 (2010).

-- 31 of 41 --

12
preemption framework.38 Ultimately, the Majority errs
because it fails to recognize that DCM trading is a subfield and
disregards the presumption against preemption.
B.
The Majority also fails to reconcile its finding of field
preemption with the existence of two savings clauses in the Act
that preserve certain state law causes of action. 7 U.S.C. §
2(a)(1)(A) provides that (1) “[n]othing in this section shall . . .
supersede or limit the jurisdiction at any time conferred on . . .
regulatory authorities under the laws of the United States or of
any State” (state law carveout), and that (2) “[n]othing in this
section shall supersede or limit the jurisdiction conferred on
courts of the United States or any State” (state court
carveout).39 Such clauses are “fundamentally incompatible
with complete field preemption” because they indicate that
38 See Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 248
(1984) (“If Congress has not entirely displaced state regulation
over the matter in question, state law is still preempted to the
extent it actually conflicts with federal law, that is, when it is
impossible to comply with both state and federal law, or where
the state law stands as an obstacle to the accomplishment of the
full purposes and objectives of Congress.” (internal citations
omitted)); see also Farina, 625 F.3d at 121 (rejecting field
preemption claim upon concluding that Federal
Communications Commission’s regulation of radiofrequency
emissions occupied the limited subfield of “areas of technical
standards and competitive market structure for cellular
service”).
39 7 U.S.C. § 2(a)(1)(A).

-- 32 of 41 --

13
Congress envisioned a role for state law in the field.40 A Swiss
cheese-like field that allows for enclaves of state authority
cannot preempt state law because field preemption requires
complete occupation on the part of the federal government.
The Majority waves away the presence of these savings
clauses by noting that the state law carveout applies “except as
hereinabove provided” by the grant of exclusive jurisdiction to
the CFTC.41 In the Majority’s view, that prefatory clause
means that Congress intended to occupy the field of DCM
trading regulation because the state law carveout does not
apply to matters within the CFTC’s exclusive jurisdiction. The
Majority misses the point, however. It does not matter if § 2’s
preservation of state law causes of action is not meant to
infringe on the CFTC’s exclusive jurisdiction. The very fact
that Congress decided to allow room for state law means that
Congress chose to not completely occupy the field.
The Majority’s position is even weaker with regard to
the state court carveout. While true that the state law carveout
is restricted by the “except as hereinabove provided” language,
the state court carveout is in a completely different sentence.42
The text of the Act therefore places no limits on the carveout
for state court jurisdiction—it is absolute and completely
unaffected by the grant of exclusive jurisdiction to the CFTC.
For that reason, I disagree with the Majority’s holding that the
40 Farina, 625 F.3d at 121.
41 Maj. Op. 15 (citing 7 U.S.C. § 2(a)(1)(A)) (emphasis in
original).
42 7 U.S.C. § 2(a)(1)(A).

-- 33 of 41 --

14
state court carveout “does not contravene the grant of CFTC’s
exclusive jurisdiction.”43
Consequently, I would hold that the presence of such
clauses is evidence of Congress’s intent to allow a certain
amount of complementary state regulation in this field.
Accordingly, field preemption does not apply.
IV.
Conflict preemption can occur if it is impossible to
comply with both state and federal law44 (impossibility), or if
state law “stands as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress”
(obstacle).45 Kalshi claims both forms of conflict preemption,
arguing that it is impossible to comply with both New Jersey’s
gambling laws and CFTC requirements, and that the
application of New Jersey’s gambling laws to Kalshi’s sports-
event contracts “subverts Congress’s aim of bringing futures
markets ‘under a uniform set of regulations.’”46
While the Majority does not address impossibility
preemption, it does agree with Kalshi that obstacle preemption
prevents New Jersey from regulating Kalshi’s sports-event
43 Maj. Op. 15.
44 See MD Mall Assocs., LLC v. CSX Transp., Inc., 715 F.3d
479, 495 (3d Cir. 2013).
45 Hillsborough Cnty., Fla. v. Automated Med. Lab'ys, Inc., 471
U.S. 707, 713 (1985).
46 Appellee Br. 30 (quoting Am. Agric. Movement, Inc. v. Bd.
of Trade of City of Chicago, 977 F.2d 1147, 1156 (7th Cir.
1992).

-- 34 of 41 --

15
contracts. I would instead hold that neither form of conflict
preemption applies here. Kalshi can comply with both New
Jersey and federal law, and New Jersey’s gambling laws as
applied to Kalshi do not frustrate the congressional objectives
behind the Act.
A.
Kalshi contends that impossibility preemption applies
because New Jersey requires that the gaming it regulates “shall
only occur within the State”47 and because New Jersey bans
wagering on college sports events involving New Jersey
college teams or taking place in the state.48 In order to comply
with these requirements, Kalshi argues that it would have to
exclude New Jersey from contracts it offers in other states,
which would violate the CFTC requirement that a DCM
provide “impartial access to its markets and services.”49 I
disagree. The impartial access requirement does not mandate
that a particular market exist for event contracts.50 Congress
simply wanted the CFTC to regulate access to a market to the
extent it exists.51
In fact, the purpose behind the impartial access
requirement was to prevent DCMs from using discriminatory
access requirements, like the creation of exclusive membership
47 N.J. Admin. Code § 13:69O-1.2(e)(2).
48 N.J. Const. art. IV, § 7, ¶ 2(D).
49 17 C.F.R. § 38.151(b).
50 See Just Puppies, Inc. v. Brown, 123 F.4th 652, 664 (4th Cir.
2024).
51 Id.

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16
standards that focus on high net worth.52 It has nothing to do
with ensuring that event contracts are available in all states.
Kalshi can still establish different categories of market
participants, such as a separate market for New Jersey
residents, as long as it does not “discriminate within [that]
particular category.”53 Kalshi has therefore not shown that it
is impossible to comply with both federal and state laws.
B.
The Majority states “that “[a]llowing New Jersey to
enforce its gambling laws and state constitution would create
an obstacle to executing the Act” because it would subvert
Congress’s aim of ensuring that futures markets operate under
a uniform set of regulations.54 While uniformity is an
important goal of the Act, “no legislation pursues its purposes
at all costs,” and it “frustrates rather than effectuates legislative
intent simplistically to assume that whatever furthers the
statute’s primary objective must be the law.”55 Such broad
purposes arguments “ignor[e] the complexity of the problems
52 See Core Principles and Other Requirements for
Designated Contract Markets, 75 Fed. Reg. 80572, 80579
n.51 (Dec. 22, 2010).
53 Id. at 80579. During oral argument, counsel for New Jersey
noted that Sporttrade is a company that offers event contracts
in the state and has been able to comply with both New Jersey
and federal regulations.
54 Maj. Op. 13.
55 Rodriguez v. United States, 480 U.S. 522, 525–26 (1987)
(emphasis in original).

-- 36 of 41 --

17
Congress is called upon to address.”56 Courts cannot use the
Supremacy Clause “to elevate abstract and unenacted
legislative desires above state law.”57
The analysis of this issue should be grounded in the text
of the statute and relevant regulations. The Special Rule,
which was added to the Act following the passage of Dodd-
Frank,58 is the only provision in the statute that addresses
gaming contracts. Therefore, I must analyze this provision to
discern whether New Jersey’s gambling laws undermine
congressional objectives. The Special Rule states that the
CFTC “may determine that . . . [event] contracts . . . are
contrary to the public interest” if they involve “gaming.”59
Kalshi is correct that this statutory provision alone does not
prohibit the trading of gaming contracts in DCMs, as it merely
gives the CFTC the authority to prohibit them. The CFTC did
use that authority, however, enacting Rule 40.11(a)(1), which
prohibits DCMs from trading, or accepting for clearing, event
contracts that involve, relate to, or reference gaming.60 Under
the plain text of this regulation, Kalshi’s sports-event contracts
are being offered in violation of federal law. If gaming
contracts, such as sports-event contracts, violate federal law,
state gambling laws as applied to such contracts cannot be
conflict preempted. Far from undermining congressional
56
Bd. of Governors of Fed. Rsrv. Sys. v. Dimension Fin. Corp, 4
74 U.S. 361, 373–74 (1986) (internal quotation marks
omitted).
57 Va. Uranium, Inc. v. Warren, 587 U.S. 761, 778 (2019).
58 Pub. L. No. 111-203, 124 Stat. 1737 (2010).
59 7 U.S.C. § 7a-2(c)(5)(C)(i).
60 17 C.F.R. § 40.11(a)(1).

-- 37 of 41 --

18
objectives, New Jersey’s gambling laws arguably complement
them.
The legislative history of Dodd-Frank also indicates
Congress’s general disdain for gaming contracts. While it is
important to be mindful “that the authoritative statement is the
statutory text,” and that “legislative history can be murky,
ambiguous, and contradictory,”61 I believe that the legislative
history can be useful in providing important context in this case
because of the paucity of references to gaming contracts in both
the Act and Dodd-Frank.
The congressional record for Dodd-Frank includes a
colloquy from then Senator Blanche Lincoln of Arkansas, who
said that the Special Rule’s purposes are “to prevent the
creation of futures and swaps markets that would allow citizens
to profit from devastating events,” “prevent gambling through
futures markets,” and “strengthen the government’s ability to
protect the public interest against gaming contracts and other
event contracts.”62 She continued:
The Commission needs the power to, and should,
prevent derivatives contracts that are contrary to
the public interest because they exist
predominantly to enable gambling through
supposed “event contracts.” It would be quite
easy to construct an “event contract” around
sporting events such as the Super Bowl, the
Kentucky Derby, and Masters Golf Tournament.
61 Sikkelee v. Precision Airmotive Corp., 822 F.3d 680, 697 (3d
Cir. 2016) (internal quotation marks and citation omitted).
62 156 Cong. Rec. S5906 (2010).

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19
These types of contracts would not serve any real
commercial purpose. Rather, they would be used
solely for gambling.63
In short, Dodd-Frank’s history undermines Kalshi’s
obstacle preemption claim. Congress intended to prohibit
gambling on DCMs, and the CFTC effectuated that intention
through its enactment of Rule 40.11(a)(1). Kalshi asserts that
its sports-event contracts comply with this regulation because
the CFTC has not taken any action against its contracts. The
Majority similarly notes that “the CFTC has chosen not to
enforce its regulation against the type of sports-related event
contracts at issue here.”64 Kalshi and the Majority overlook
that agency inaction alone cannot preempt state law,65
especially not when that inaction constitutes a failure to
“adhere to its own rules and regulations.”66 While the CFTC
has recently issued an Advance Notice of Proposed
Rulemaking on regulating prediction markets,67 Rule
40.11(a)(1)’s prohibition of gaming contracts continues to be
in place. Accordingly, neither the CFTC’s failure to enforce
its own regulation nor nonexistent rules governing event
contracts are sufficient to coat Kalshi’s self-certified gaming
contracts with a sheen of legality. They cannot be a basis to
argue conflict preemption.
63 Id. at S5906–07.
64 Maj. Op. 7.
65 Fellner v. Tri-Union Seafoods, L.L.C., 539 F.3d 237, 247 (3d
Cir. 2008) (citing Puerto Rico Dep't of Consumer Affs. v. Isla
Petroleum Corp., 485 U.S. 495, 503 (1988); Sprietsma v.
Mercury Marine, 537 U.S. 51, 65–70 (2002)).
66 Reuters Ltd. v. FCC, 781 F.2d 946, 950 (D.C. Cir. 1986).
67 See Prediction Markets, 91 Fed. 12516 (Mar. 16, 2026).

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Further, a federal law does not preempt state laws where
the activity regulated by the state is merely a peripheral
concern of the federal law.68 The lack of references to gaming
contracts in Dodd-Frank indicates that such contracts were a
peripheral concern when the Special Rule was enacted. This is
in contrast to New Jersey’s laws, which have the explicit
purpose of governing the gaming industry and are not intended
to intrude on federal regulation of the futures markets.69
Finally, Kalshi’s argument that New Jersey’s gambling
laws pose an obstacle to the accomplishment of Congress’s
goals behind the Act is undercut by the lack of a clear
congressional statement that the Special Rule was intended to
have preemptive effect. The Act contains both a preemption
and non-preemption provision, neither of which cover trading
on DCMs. 7 U.S.C. § 16(e)(2) specifies that the Act preempts
the application of state gaming laws to certain enumerated
transactions that are exempted or excluded from the Act.70
68 N.Y. Susquehanna & W. Ry. Corp. v. Jackson, 500 F.3d 238,
252 (3d Cir. 2007); see also Chi. & N.W. Transp. Co. v. Kalo
Brick & Tile Co., 450 U.S. 311, 317 (1981).
69 Ford Motor Co. v. Ins. Comm’r of Pa., 874 F.2d 926, 939
(3d Cir. 1989) (finding no implied preemption because “the
intent of the federal scheme was to regulate the operation of
federally insured thrifts,” and thus federal law “did not
preclude supplemental state regulations which . . . imposed a
restriction upon the affiliations that the thrift could have and
were designed more to regulate the insurance industry rather
than to control the operation of the savings and loan industry”
(alteration in original)).
70 7 U.S.C. § 16(e)(2).

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Transactions “conducted on or subject to the rules of a
registered entity,” like a DCM, are not on the list of enumerated
transactions.71 7 U.S.C. § 16(e)(1) expressly states that the Act
does not preempt the application of state laws to any futures
contract conducted outside regulated exchanges like DCMs.72
Since Congress’s silence can be construed in more than one
way, I would apply the presumption against preemption and
interpret the lack of reference to DCM trading as weighing
against conflict preemption.
***
For these reasons, I would hold that Kalshi cannot
demonstrate a reasonable likelihood of success on the merits
on its preemption claims. I therefore respectfully dissent.
71 See id.
72 7 U.S.C. § 16(e)(1).

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