GOUKER: Judge Rules Against Kalshi In Maryland Case
Kalshi’s winning streak in federal court is over.
A federal judge in the US District Court for the District of Maryland has denied Kalshi’s motion for a preliminary injunction against Maryland officials.
Maryland is one of seven states that have sent cease-and-desist letters to Kalshi for offering illegal sports betting; Kalshi has sued three of them to stop the states from taking action. Kalshi had won preliminary injunctions in Nevada and New Jersey.
Kalshi seems likely to appeal the decision immediately, but it’s the first setback in Kalshi’s legal argument for offering nationwide sports betting under the Commodity Futures Trading Commission.
Some instant analysis from attorney Andrew Kim, who has been following the case closely.
Judge Abelson's decision wisely avoids the question of whether Kalshi's sports event contracts are "swaps," which I've previously called a trap. (He assumes that they are, for the sake of argument.)
Instead, Judge Abelson leans heavily on the presumption against preemption. He rejects Kalshi's view that this is just about derivatives markets — unlike the judges in Nevada and New Jersey, Judge Abelson recognizes that the states have a significant interest here — one of historical significance — which prediction markets are trying to set aside by invoking a law that doesn't clearly displace the role of state gaming regulators.
In other words, Judge Abelson seems to be saying, "I need to be absolutely sure that Congress intended to unleash the bull of DCMs and sports prediction markets into the china shop of state-regulated gaming and gambling. And I don't see that clarity in the Commodity Exchange Act." More on that issue here.
I suspect Kalshi will appeal — and will do so quickly, so that it can ask the U.S. Court of Appeals for the Fourth Circuit to temporarily block Maryland from enforcing its gaming laws while its appeal is pending. (That may not be necessary, if Maryland voluntarily agrees to hold off on enforcement.) If Kalshi asks the Fourth Circuit to intervene by granting an injunction pending appeal, expect things to move quickly. If Kalshi seeks emergency relief, it's possible that the Fourth Circuit will weigh in on the legal merits before the Third Circuit does in the New Jersey case.
A Kalshi spokesperson offered this statement to The Event Horizon:
"We are disappointed with the court’s decision and will move for an immediate stay of the ruling. We are on the right side of the law, and ultimately expect to prevail in this fight.”
- https://nexteventhorizon.substack.com/p/news-judge-rules-against-kalshi-in