- Kalshi’s attempt to expand its federally regulated sports event contracts into Maryland has hit a legal roadblock.
- A U.S. District Court judge denied the company’s request for a preliminary injunction, ruling that Kalshi failed to show that federal commodities law overrides state gambling regulation.
- The decision marks Kalshi’s first courtroom loss in an ongoing legal fight that could shape the future of prediction markets.
ANNAPOLIS, Md. – Kalshi has suffered its first courtroom defeat in its effort to offer sports event contracts nationwide. On Friday, U.S. District Judge Adam Abelson denied the company’s motion for a preliminary injunction in Maryland.
This prevents Kalshi from operating its sports-related prediction markets in the state during the ongoing lawsuit against the Maryland Lottery and Gaming Control Commission.
In his ruling, Judge Abelson wrote that Kalshi “failed to show a likelihood of success” on its claim that the Commodity Exchange Act (CEA) preempts Maryland sports betting laws. The court concluded that Kalshi had not demonstrated that Congress intended the CEA to override state-level regulation of sports wagering.
“It is highly unlikely that Congress would have overridden state gambling laws without at least some indication in the text and legislative history that it intended to do so,” wrote Abelson.
Kalshi had argued that the CEA, under which it is federally regulated by the Commodity Futures Trading Commission (CFTC), gives it exclusive authority to offer legal sports betting through contracts on events. Further, they argue that states cannot impose additional licensing requirements.
Maryland regulators disagreed, treating Kalshi’s sports contracts as unlicensed sports betting.
A New Boundary Set
Abelson’s decision is the first time a court has ruled against Kalshi in its legal battles with state regulators. Courts in New Jersey and Nevada previously granted preliminary injunctions in favor of the company, allowing operations to continue in those states during litigation.
In response to the Maryland loss, Kalshi filed a motion for an injunction pending appeal, which would block enforcement of the decision while a higher court reviews the case. The company also claimed that geofencing Maryland users would require months of development and cost tens of millions of dollars.
Kalshi’s lawsuit against the Maryland Lottery and Gaming Control Commission remains active. The outcome could influence ongoing legal questions about whether federally regulated prediction markets can double down as legal online sportsbooks without complying with state gambling laws.
