Kalshi Files Lawsuit, Preliminary Injunction against Maryland

Things are warming up in the fight between state regulative companies and prediction market operators.


The most recent shot across the bow came Monday, when forecast market company KalshiEX LLC (Kalshi) submitted a movement in the United States District Court for the District of Maryland Northern Division versus the Maryland Lottery and Gaming Control Commission (MLGCC).


Key Insights


- Kalshi filed comparable movements versus New Jersey and Nevada.
- An essential problem is whether sports occasion contracts offered by forecast markets are state regulated sports wagers or federally regulated futures agreements.


Kalshi's newest fit is in reaction to Maryland's recent cease-and-desist order released previously this month. Maryland released cease-and-desist orders to three forecast market operators, however Kalshi is the only one to react with a lawsuit.


In its cease-and-desist order, Maryland Lottery and Gaming Control firm director John Martin wrote "Kalshi is operating in Maryland and is providing and conducting what is, in fact, wagering on sporting occasions. However, Kalshi does not hold a sports betting license released by the Commission, its wagers have actually not been approved by the Commission, and it is not otherwise authorized under Maryland law to use wagers on sporting occasions."


Kalshi argues in its match that the MLGCC is "unconstitutionally threatening to prohibit trading of Plaintiff KalshiEX LLC's (Kalshi) sports-event contracts in Maryland, even though those contracts are licensed by the Commodity Futures Trading Commission (CFTC) - the federal agency that Congress endowed with 'special jurisdiction' to manage trading on federally designated exchanges like Kalshi.