Maryland court rules in favor of regulators against Kalshi in a legal dispute
In a recent turn of events, the prediction market platform Kalshi is prohibited from offering sports event contracts in Maryland without a state gambling license, following a federal court ruling.
The Maryland federal court, presided over by U.S. District Judge Adam B. Abelson, denied Kalshi's request for an injunction to block the state's cease-and-desist order on August 5, 2025. The judge ruled that Kalshi must comply with Maryland's gambling laws and obtain a state license to operate within the state [1][2][3].
Kalshi had initially argued that its sports event contracts are regulated exclusively by the federal Commodity Futures Trading Commission (CFTC) under the Commodity Exchange Act (CEA), and thus preempt state gambling laws. However, the Maryland court disagreed, stating that states retain authority to regulate gambling, including sports betting, within their borders [1][3][4]. The judge found insufficient evidence that Kalshi was likely to succeed on the merits of its federal preemption claim.
This ruling contrasts with earlier federal court decisions in Nevada and New Jersey, where preliminary injunctions were granted favoring Kalshi's position on federal preemption, creating a split among courts that could ultimately be resolved by the U.S. Supreme Court [3][4].
Following the Maryland ruling, Kalshi promptly filed an appeal with the U.S. Court of Appeals for the Fourth Circuit, contesting the district court's interpretation of the CEA and federal regulatory protections [1][4]. A status conference was held on August 7, 2025, to set procedural steps including potential motions for a stay or expedited appeal, and to consider whether Kalshi may continue operations in Maryland during the appeal [1].
The case is part of a broader unresolved question regarding the interplay between federal commodities law and state gambling regulations [1][2][3][4][5]. A coalition of tribal governments and Indian gaming associations has also filed an amicus brief in support of Maryland's position, while critics argue that sports-based event contracts are effectively unlicensed sports gaming.
Kalshi launched sports contracts earlier this year under a self-certification process permitted by the CEA. The company is registered with the Commodity Futures Trading Commission (CFTC) and faces ongoing regulatory and legal challenges. Additionally, Kalshi is under competitive pressure in the prediction market space from rivals like Polymarket.
In summary, Kalshi is currently banned from offering sports event contracts in Maryland without a state license due to a federal court ruling, and is actively appealing this decision. The outcome of this case could have significant implications for the prediction market industry and the balance of power between federal and state regulations.
- Kalshi is prohibited from offering sports event contracts in Maryland without a state gambling license, as ruled by the Maryland federal court.
- The judge ordered Kalshi to comply with Maryland's gambling laws and acquire a state license to operate, denying their request for an injunction.
- The Maryland court disagreed with Kalshi's argument that its sports event contracts are exclusively regulated by the federal Commodity Futures Trading Commission (CFTC).
- Following the Maryland ruling, Kalshi filed an appeal with the U.S. Court of Appeals for the Fourth Circuit, contesting the district court's interpretation of the CEA and federal regulatory protections.
- The case is part of a broader unresolved question concerning the interplay between federal commodities law and state gambling regulations.
- Kalshi, registered with the CFTC, faces ongoing regulatory and legal challenges due to offering sports contracts under a self-certification process, all while competing with rivals like Polymarket in the prediction market space.
