Kalshi Files for Injunction After Key Loss in Maryland

Kalshi’s string of legal victories has come to an end.

A Maryland district court has rejected a motion filed by Kalshi for an injunction as its lawsuit against the Maryland Lottery and Gaming Control Commission plays out. US District Judge Adam B. Abelson rejected Kalshi’s request, which would allow it to continue to operate its sports prediction platform in the state until the lawsuit was resolved.

It is the first significant legal loss for Kalshi, who has managed to fend off similar lawsuits in Nevada and New Jersey.

Maryland Judge Offers Different Perspective

Courts in New Jersey and Nevada have both allowed Kalshi to operate as lawsuits against them are reviewed. They have sided with the operator’s argument that the Commodity Futures Trading Commission (CFTC) has sole authority to regulate sports prediction markets. However, Judge Abelson offered a different perspective.

Kalshi had argued that the Commodity Exchange Act protects them from state regulators. Judge Abelson disagreed, saying that the act did not mention overruling state gambling laws. Given the expected growth and impact of sports prediction markets, he was not willing to apply the CEA without express instructions from Congress to do so.

Kalshi Files for Injunction Pending Appeal

While the Maryland ruling is a setback for Kalshi, it doesn’t mean the operator will need to vacate the state. 

The company filed a motion for an injunction pending appeal in an appellate court on August 1. This would allow the company to remain active in the state as they appeals Judge Abelson’s ruling. While they may find a more favorable court, the bar is set higher for the motion to be granted.

Is Momentum Turning Against Kalshi?

Kalshi's legal loss isn’t the only bad news the company has gotten over the last week. CFTC nominee Brian Quintenz, who is on Kalshi’s board, suffered a setback in his approval. The Senate Agriculture committee was supposed to vote in favor of his nomination last week, but received a request from the White House to delay the vote.

The White House has reaffirmed its support for Quintenz, but the delay has many questioning it. Republican state lawmakers and the sports betting industry are pressing hard on Senators to reject the nomination. They believe sports prediction markets will lead to a significant loss in tax revenue, leaving less money for schools and other public programs that receive funding from sports betting.

There has also been pressure coming from other sports prediction platforms, which express concerns over Quintenz’s ties to Kalshi. They worry he will use his authority to give his former company an edge, leading operators to ask the President to find a new candidate.