Kalshi has withdrawn its motion for a new injunction in Maryland after reaching an agreement with state officials that makes the order unnecessary. The predictions market company has agreed to wait for intervention by the state courts.
Key Takeaways
- Maryland has agreed not to enforce its laws against Kalshi until the Fourth Circuit rules on the company's appeal.
- The agreement removes the immediate need for a new injunction in Maryland.
- The Fourth Circuit decision is not expected for at least two months, after which Maryland could resume enforcement.
According to a filing made on Wednesday, Maryland has agreed not to enforce its gambling laws against Kalshi until the Fourth Circuit Court of Appeals issues a decision on the company's pending appeal. Kalshi stated that the assurance of nonenforcement eliminates the need for an injunction during the appeal process.
The dispute centers on whether Kalshi's sports event contracts should be regulated under federal commodities law or state sports betting rules. Kalshi contends it is a federally regulated "designated contract market" overseen by the Commodity Futures Trading Commission, rather than a sportsbook subject to Maryland Lottery and Gaming oversight.
The state previously concluded that Kalshi's products were "indistinguishable" from sports bets.
Kalshi's appeal schedule in the Fourth Circuit requires its opening brief by Sept. 15 and Maryland's response by Oct. 15. A decision could take more than two months, after which the state may resume enforcement if it prevails.
Prior court loss in Maryland sets the stage for appeal
The agreement follows Kalshi's earlier loss in the US District Court for the District of Maryland, where Judge Adam B. Abelson denied the company's request for an injunction allowing continued operations in the state. The ruling marked Kalshi's first major courtroom setback, following favorable outcomes in New Jersey and Nevada.
Abelson held that while the federal Commodity Exchange Act overrides state laws on commodity regulation, it does not preempt state authority over betting laws. He further noted that Kalshi could seek a sports betting license in Maryland if it wished to continue offering its sports event contracts.
Kalshi appealed the ruling to the Fourth Circuit and requested a new injunction to continue business throughout the appellate process. The company explained that complying with the betting laws of Maryland prior to the decision of the court was not practicable, and the lawfulness of its contracts still remained in dispute.
Maryland could enforce its cease-and-desist order without an injunction, potentially causing financial harm if the appellate court later reversed the lower court ruling.
Nevada dispute mirrors Maryland legal fight
While the Maryland appeal progresses, Kalshi remains embroiled in a similar dispute in Nevada. Last week, Flutter Entertainment executives appeared before the Nevada Gaming Board to address speculation about a possible arrangement with Kalshi, though no plans were confirmed.
In March, the Nevada Gaming Control Board ordered Kalshi to stop operating in the state, citing its sports betting laws. A federal court issued a preliminary injunction preventing Nevada from enforcing its order.
