Maryland Judge Denies Kalshi’s Motion for Preliminary Injunction

The court’s ruling appears to hinge on a presumption against preemption, recognizing the state's longstanding interest in regulating both prediction markets and sports bettingImage Source: Shutterstock.com

US District Judge Adam Abelson of Marylandrejected Kalshi’srequest for a preliminary injunction against the state’s sports betting regulators in a ruling issued on Friday.

Kalshi Denied Injunction in Maryland Sports Betting Case

After the Maryland Lottery and Gaming Commission (MLGC)issued a formal cease-and-desist letter to Kalshi in April, the operator’s attempt to secure a preliminary injunction and temporary restraining order against the regulator was denied. At the heart of the dispute is Kalshi’s offering of prediction contracts tied to sports outcomes. The MLGC considers these products to constitute unregulated sports betting, prompting its enforcement action. 

However, Kalshi disputes that interpretation. The company has maintained both publicly and in court that its sports platform (where users can buy event contracts based on the outcomes of sporting events) does not constitute sports betting. 

The court’s ruling appears to hinge on a presumption against preemption, recognizing the state’s longstanding interest in regulating both prediction markets and sports betting. This stance contrasts with Kalshi’s argument that such a presumption is irrelevant when it comes to the regulation of derivatives markets. This reasoning diverges from the approach ngaken by federal judges in New Jersey and Nevada, who granted Kalshi’s motions for preliminary injunctions after similar cease-and-desist actions were brought by state gaming regulators in those jurisdictions.

Kalshi Has Seen Such Challenges Before

Gaming regulators in over a dozen states have issued cease-and-desist letters to Kalshi and other prediction markets, contending that their event contracts constitute illegal gambling. Merland is just one interesting case as the state saw tribes challenge Kalshi’s sports betting contracts, claiming they violate tribal gaming laws in the state.

In response, Kalshi filed lawsuits against several state regulators. Courts in Nevadaand New Jerseysided with Kalshi, ruling that the company falls under federal jurisdiction, effectively limiting the authority of state regulators and allowing Kalshi to continue operations there.

However, Friday’s decision in Maryland marks a significant setback. Kalshi had sought a preliminary injunction to block state enforcement efforts, similar to its strategy in Nevada and New Jersey, but the court denied the request.

Despite the ruling, Kalshi is expected to maintain operations in Maryland as it continues to pursue legal challenges and prepares potential appeals. Still, the decision introduces fresh uncertainty about the legality and long-term viability of US prediction markets.