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New Jersey Declines Option to Challenge Injunction Barring Enforcement Actions Against Kalshi

Derek Helling

Legal Writer

Publish Date: Apr 22, 2026

Fact checked by: Matt Moreno

Key Points

An appellate court decision upholding the injunction in Kalshi’s favor will remain effective for the time being.
The injunction blocks New Jersey gambling regulators and law enforcement from pursuing civil or criminal penalties against Kalshi.
New Jersey could have asked for a rehearing of its appeal by the full court.

New Jersey has let a deadline pass for requesting a new hearing of its appeal of a court ruling limiting its ability to enforce its gambling laws against prediction market exchange Kalshi. While it still has appeal options remaining, the missed deadline means that New Jersey has accepted the status quo the injunction has created in regards to people within its borders trading designated contract markets.

A trial deciding whether, and to what extent, New Jersey can exercise sovereignty over prediction markets within its borders may still proceed. New Jersey officials may be looking to that affair at this juncture.

New Jersey opts not to press for further proceedings on injunction appeal

On Tuesday, a deadline for New Jersey to request an en banc hearing of the federal appellate court for the Third District came and went. The deadline applied to New Jersey’s failed panel appeal of a trial court’s issuance of an injunction that Kalshi requested.

The panel from the Third upheld the injunction on April 6, after the trial court granted Kalshi’s motion in May 2025. The acting executive director of the New Jersey Division of Gaming Enforcement Mary Jo Flaherty sent a cease-and-desist demand to Kalshi in March 2025.

In its petition to the trial court, Kalshi argued that its designated contract markets (DCMs) are regulated by the federal government and not subject to New Jersey oversight. The petition also stressed that without intervention from the court, it would irrevocably lose revenue, plus consumers would be confused as to the legality of the DCMs.

The court agreed, and the three-judge panel from the Third found no issues with the trial court’s decision. New Jersey could have asked the entire Third Circuit to review the panel’s decision, but its time to do so has passed.

For the time being, that means New Jersey has essentially accepted its defeat, albeit a potentially temporary one. The state still has cards to play here, though.

New Jersey’s path forward from this point

At this juncture, New Jersey has three options with varying degrees of practicality. Reaching a settlement with Kalshi, through which Kalshi might ask the court to withdraw its complaint, is the least likely path forward.

The second and more feasible choice is to petition the United States Supreme Court to review the Third panel’s decision to uphold the injunction. With an actual trial in this matter still pending, though, the Supreme Court granting cert (agreeing to hear) an appeal of the injunction might be wishful thinking.

At this time, the final course of action that seems most likely is to attempt to convince the district court that DCMs are tantamount to gambling, giving New Jersey jurisdiction over Kalshi’s exchange. Should the district court find for Kalshi after a trial has occurred, the appeal paths reopen for New Jersey through the Third and maybe the US Supreme Court.

At this time, it looks like New Jersey has opted to try to fight another day. How well it fares in the forthcoming litigation could play a role in the future of prediction markets across the U.S.

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