Kalshi retracts application for injunction in Maryland courts
In a significant legal development, the dispute between Kalshi and the State of Maryland over the regulation of Kalshi’s sports event contracts is ongoing. The U.S. District Court for the District of Maryland denied Kalshi’s motion for a preliminary injunction, allowing Maryland gaming regulators to pursue civil and criminal enforcement actions against Kalshi for operating without a Maryland gaming license [1][3].
Kalshi, a company that operates as a federally regulated "designated contract market" overseen by the Commodity Futures Trading Commission (CFTC), argues that federal regulation under the Commodity Exchange Act (CEA) preempts state gambling laws. However, the Maryland court rejected this preemption, emphasizing the state’s authority to regulate gambling within its borders and citing a “Special Rule” in the CEA that prohibits event contracts involving activities illegal under state law [2].
Following this ruling in early August 2025, Kalshi appealed to the Fourth Circuit Court of Appeals on August 5, and continues to seek a stay of the Maryland ruling to prevent enforcement while the appeal proceeds [1][4]. This temporary halt in enforcement is crucial for Kalshi, as the company has about 17,000 users in Maryland, with ongoing market positions. Ceasing operations solely in Maryland would violate federal impartial access rules, and ceasing nationwide operations is impractical [5].
The dispute between Kalshi and Maryland continues in the Fourth Circuit. Kalshi's opening brief is due on 15 September, and Maryland's response is due on 15 October. Kalshi has withdrawn its request for a new injunction in Maryland, but it continues to argue that Maryland's laws should not apply to federally regulated contracts [6].
Maryland, on the other hand, contends that Kalshi's contracts are effectively sports wagers subject to its Lottery and Gaming oversight. If the appellate court rules against Kalshi, Maryland could have enforced a cease-and-desist order, disrupting Kalshi’s business and potentially exacerbating losses. However, by securing the temporary non-enforcement pledge, Kalshi has avoided an immediate legal conundrum [5].
This decision marked Kalshi's first significant legal setback after favourable rulings in New Jersey and Nevada. If successful in its appeal, Kalshi could pursue a Maryland sports betting licence to continue offering sports event contracts in the state. The outcome of this case could set a precedent for the regulation of prediction markets and sports wagering authority in the United States.
References: [1] Associated Press. (2025, August 5). Court denies preliminary injunction for Kalshi. Retrieved from https://www.apnews.com/article/business-sports-regulation-maryland-lawsuits-courts-a69fa7546e7147524d2a89e416a24a46
[2] Goldman, A. (2025, August 10). Maryland vs. Kalshi: The Battle for Sports Betting Regulation. Retrieved from https://www.law360.com/articles/1525967/maryland-vs-kalshi-the-battle-for-sports-betting-regulation
[3] Kalshi. (2025, August 5). Press Release: Kalshi Responds to District Court Ruling in Maryland. Retrieved from https://www.kalshi.com/press/kalshi-responds-to-district-court-ruling-in-maryland
[4] Kalshi. (2025, August 5). Press Release: Kalshi Appeals Maryland Ruling to Fourth Circuit. Retrieved from https://www.kalshi.com/press/kalshi-appeals-maryland-ruling-to-fourth-circuit
[5] Paddock, R. (2025, August 10). Maryland and Kalshi's Prediction Market Dispute: What Happens Next? Retrieved from https://www.sportshandle.com/2025/08/10/maryland-kalshi-prediction-market-dispute-what-happens-next/
[6] Zernoff, B. (2025, August 15). Kalshi Drops Request for Injunction in Maryland. Retrieved from https://www.bloomberg.com/news/articles/2025-08-15/kalshi-drops-request-for-injunction-in-maryland-dispute-with-state
- Amidst the ongoing dispute with Maryland over the regulation of sports event contracts, Kalshi, an iGaming company, seeks a stay of the Maryland ruling to prevent enforcement while it appeals to the Fourth Circuit Court of Appeals.
- Maryland contends that Kalshi's contracts are effectively sports wagers subject to its Lottery and Gaming oversight, and if successful in its appeal, Kalshi could pursue a Maryland sports betting license to continue offering sports event contracts in the state.
- The outcome of this case could set a precedent for the regulation of prediction markets and sports wagering authority in the United States, impacting not only the finance and business of Kalshi, but also the wider iGaming and sports betting industry.
- If the appellate court rules against Kalshi, it could face a potential disruption of its business and potentially exacerbate losses, underscoring the significance of the regulation surrounding gambling, gaming, betting, and sports events in the legal landscape.
