Preemption (CEA preemption)
Preemption is the constitutional principle that federal law overrides conflicting state law. In prediction markets it refers to the argument that the Commodity Exchange Act (CEA), which gives the CFTC exclusive jurisdiction over futures and swaps traded on exchanges, displaces state gambling law for contracts listed on CFTC-designated exchanges. Platforms and the CFTC make that argument; many states reject it, especially for sports contracts. The federal appeals courts have split, with the Third Circuit siding with Kalshi against New Jersey in April 2026 and the Ninth Circuit siding with Nevada in August 2026, and New Jersey has asked the Supreme Court to resolve the question.
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