On April 7, 2026, the U.S. Court of Appeals for the Third Circuit ruled 2-1 that the Commodity Futures Trading Commission (CFTC) has “likely exclusive” jurisdiction over sports-related event contracts — a decision that blocks New Jersey from stopping Kalshi and represents the first federal appellate ruling on the central question driving more than 20 lawsuits across the country.

For the four New Mexico tribes that filed their own federal Kalshi suit on May 12, 2026, the Third Circuit decision is the most significant adverse legal data point so far — and the reason most legal observers now expect the dispute to reach the U.S. Supreme Court.

What the court ruled

The Third Circuit majority held that the Commodity Exchange Act (CEA) likely vests the CFTC with exclusive jurisdiction over event contracts traded on a CFTC-registered designated contract market (DCM). Under that reading, state gambling laws cannot be used to prohibit Kalshi’s sports event contracts so long as the contracts are listed on a federally regulated exchange.

The ruling was 2-1. One judge dissented, and legal analysts at Paul, Weiss and Holland & Knight noted that the divided opinion plus the significant federalism questions involved make the case a strong candidate for further review:

  • En banc rehearing before the full Third Circuit (deadline approximately late May 2026)
  • Supreme Court certiorari petition (deadline approximately early July 2026 absent an en banc petition)

Why it matters for the NM lawsuit

The Third Circuit ruling is not binding on the U.S. District Court in Albuquerque where the four NM tribes filed their May 12 federal suit, but it cuts directly against the central legal theory of that complaint. The Mescalero Apache, Pojoaque, Sandia, and Isleta Pueblos argue that Kalshi violates:

  • Tribal gaming ordinances (which require sports bettors to be 21+, vs. Kalshi’s 18+)
  • The 2015 Class III tribal-state compact
  • The Indian Gaming Regulatory Act (IGRA)

The Third Circuit’s preemption holding undercuts all three lines of argument: if the CFTC truly has exclusive jurisdiction, then state and tribal gambling regulation cannot reach Kalshi’s contracts at all. NM tribal lawyers will argue tribal sovereignty under IGRA is constitutionally distinct from ordinary state gambling regulation, but the Third Circuit’s framing makes that an uphill battle.

A split is emerging — which is why SCOTUS is likely

Federal and state courts have ruled in opposite directions throughout 2026:

  • Pro-Kalshi (preemption wins): New Jersey (Third Circuit, April 7), Tennessee (federal court, temporary block of state enforcement)
  • Pro-state (gambling laws apply): Massachusetts (Suffolk Superior Court, January 21), Ohio (federal District Court, March), Nevada (Carson City First Judicial District, March-April)

The Ninth Circuit is expected to rule 60-120 days after its April 16, 2026 oral argument, and the Fourth Circuit is also considering the issue. A clearer split is likely by late 2026, which would in turn make Supreme Court review more likely. Prediction market traders themselves currently assign roughly a 64% probability that the Supreme Court will accept a sports event contract case by the end of 2026, according to Sportico.

The federal pile-on for Kalshi

The CFTC has filed amicus briefs in multiple Kalshi cases throughout 2026 explicitly supporting Kalshi’s preemption position:

  • February 17, 2026: CFTC amicus in the Ninth Circuit (Nadex/Crypto.com case)
  • April 24, 2026: CFTC amicus at the Massachusetts Supreme Judicial Court
  • May 12, 2026: CFTC amicus in the Sixth Circuit (Ohio case)

Together with the Third Circuit win, the CFTC briefing represents a coordinated federal defense of prediction-market preemption — even as 38 state attorneys general have lined up against Kalshi in coordinated state-level filings.

What it means for NM bettors

Nothing changes at NM tribal sportsbook counters. The five legal NM books — Santa Ana Star, Isleta + BetMGM, Inn of the Mountain Gods, Buffalo Thunder, and Route 66 — continue to operate retail-only. Online sports betting in NM remains illegal.

But the Third Circuit ruling raises a real near-term scenario: if federal preemption ultimately wins at the Supreme Court, Kalshi and similar prediction-market platforms may have a federally protected back door into the NM market without ever obtaining a tribal partnership or triggering compact renegotiation. That would almost certainly force NM’s legislature to confront the question of state-licensed online sports betting on terms not of its own choosing.