DOJ Bets Big on Prediction Markets, and Kalshi's Legal Fight Just Got Bigger
DOJ Bets Big on Prediction Markets, and Kalshi's Legal Fight Just Got Bigger The Justice Department has thrown its weight behind prediction-market platforms in one of the most closely watched regulat
DOJ Bets Big on Prediction Markets, and Kalshi's Legal Fight Just Got Bigger
The Justice Department has thrown its weight behind prediction-market platforms in one of the most closely watched regulatory battles in fintech law, filing a statement of interest that backs Kalshi in its long-running fight with state gaming regulators over whether event contracts are futures or illegal gambling.
The dispute traces back to Kalshi's 2023 victory against the Commodity Futures Trading Commission, when a federal judge in the District of Columbia ruled the CFTC had overstepped by blocking the exchange from listing congressional-control contracts. Kalshi began trading them days later. The CFTC's appeal remains pending before the D.C. Circuit, and the agency has since withdrawn its original order — a move Kalshi has argued should end the case.
Now the fight has spread to the states. Nevada and New Jersey gaming regulators moved to shut Kalshi down within their borders, and a federal judge in Nevada issued a temporary restraining order against the company in March 2025. Kalshi sued Nevada in D.C. federal court, arguing that only the CFTC — not state gaming boards — can regulate products listed on a federally designated contract market. The case is Kalshi EX LLC v. Nevada Gaming Control Board, and the DOJ's filing aligns the federal government with Kalshi's preemption theory.
The stakes reach well beyond one company. If states can police event contracts, every prediction market operating nationally faces a patchwork of gambling laws. If Kalshi wins, the CFTC's exclusive jurisdiction over designated contract markets gets a major boost — and platforms like Polymarket, which re-entered the U.S. market after a 2022 settlement, gain cover.
Watch for the D.C. Circuit's ruling on the CFTC appeal, which could arrive any time, and for further state enforcement actions as the 2026 midterms approach. Prediction markets tied to elections will be the first stress test.
Primary sources: U.S. Department of Justice | CourtListener docket records
FedKite Wire
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