Legal Breakthrough for Kalshi: New Jersey Court Halts Enforcement Actions by Gaming Regulators
The New Jersey District Court has issued a temporary restraining order and preliminary injunction in favor of Kalshi against the New Jersey Division of Gaming Enforcement (NJDGE).
On April 28, Judge Edward S. Kiel approved the motion, thereby preventing the NJDGE or the New Jersey Casino Control Commission from “pursuing civil or criminal enforcement actions against Kalshi concerning its sports-related event contracts.”
As part of the terms, Kalshi is required to secure a $100,000 bond through the Clerk’s Office.
In his ruling, Judge Kiel noted that the Commodity Futures Trading Commission (CFTC) designated Kalshi as a contract market in 2020. He pointed out that even though Kalshi is now offering sports contracts, the “CFTC has not reviewed or prohibited Kalshi’s sports-related contracts despite possessing the authority to do so.”
A key issue in the case is that Kalshi’s contracts involve wagering on college basketball tournaments, which contrasts with the New Jersey Constitution, prohibiting betting “on a college sport or athletic event that takes place in New Jersey or on a sport or athletic event in which any New Jersey college team participates regardless of where the event takes place.”
Though the NJDGE emphasized that Kalshi facilitates betting on sports outcomes, Judge Kiel stated, “finally, I am persuaded that Kalshi’s sports-related event contracts fall within the CFTC’s exclusive jurisdiction and am unconvinced by defendants’ arguments to the contrary.”
He further remarked, “Because I found above that Kalshi has established a likelihood of success in demonstrating that New Jersey law is preempted as applied to its sports-related contracts, I also conclude that the interests favor injunction.”
Judge Kiel also mentioned that limited to Kalshi’s alleged ongoing violations of New Jersey law, “Kalshi – as noted in Hendrick – proceeds at its own peril.”
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It’s worth noting that this case has been in progress since March 29, and Kalshi is involved in several other lawsuits across Nevada, Ohio, Illinois, and Maryland.
The judge indicated that if the NJDGE is eventually proven correct, they will be able to initiate enforcement actions; however, this has not been established yet.
While the minimum bond for such cases could be set at $10,000, it has been increased to $100,000 in this instance.
Judge Kiel clarified, “This sum is intended to mirror that of the maximum fine of a violation under the Sports Wagering Act.”
