Maryland Enforcement Efforts Against Kalshi Paused Until Appeal Ruling

• Kalshi’s sports event contracts will remain available in Maryland until a pending appeal is ruled on
• Maryland has agreed to pause enforcement efforts against Kalshi until the U.S. Court of Appeals for the Fourth Circuit rules on an appeal decision
• U.S. District Judge Adam Abelson recently denied Kalshi’s motion for a preliminary injunction

Kalshi’s sports event contracts will remain in Maryland…at least for now.

According to a new filing on Wednesday, Aug. 13, Kalshi has agreed to withdraw a pending motion for an injunction as Maryland has also agreed to forgo enforcement of sports events contracts against Kalshi until the U.S. Court of Appeals for the Fourth Circuit rules on its pending appeal.

“On August 12, Kalshi received written assurances from counsel for defendants that defendants would forgo enforcement of the relevant Maryland laws against Kalshi pending the outcome of Kalshi’s pending appeal in the Fourth Circuit. That assurance of nonenforcement has rendered an injunction pending appeal unnecessary. Kalshi accordingly withdraws its motion seeking that relief,” Counsel for Kalshi wrote in the filing.

Status Quo Until Appeal Ruling

The filing came about two weeks after Kalshi experienced its first legal setback in the state. U.S. District Judge Adam B. Abelson denied Kalshi’s request for a preliminary injunction, which would have allowed the company to continue offering sports event contracts in the Old Line State through the duration of its lawsuit against the Maryland Lottery and Gaming Control Commission.

“Kalshi has failed to show a likelihood of success on the merits of its claim that the Commodity Exchange Act (CEA) preempts Maryland’s gaming laws. The motion for a preliminary injunction will be denied,” Abelson wrote in his ruling.

Kalshi and state regulators have been vying in court for control over who actually regulates sports event contracts. Kalshi believes that state regulatory bodies do not have the right to intrude on the government’s “exclusive” authority to regulate prediction market, filing lawsuits in New Jersey, Nevada, and Maryland to defend its practices.

State regulators equate sports event contracts as sports betting and believe they should have a say in how they’re regulated, taxed, and licensed.

At least in Maryland, sports event contracts will remain until a ruling from the Fourth Circuit court on the company’s pending appeal. Kalshi is required to submit an opening brief to the court by Monday, Sept. 15, while Maryland counsel is required to submit a brief by Wednesday, Oct. 15.

This means contracts will be available in the state at least through October.

Kalshi Failed to Show Likelihood of Success, Maryland Judge Rules

Under Maryland gaming law, the commission noted in the lawsuit, sporting event contracts constitute “sports wagering” and can only be offered by a licensed sports betting operator. Kalshi believes its offerings are not required to comply with state laws, as they have been preempted by the CEA.

Judge Abelson noted that Kalshi must establish four factors to obtain a preliminary injunction:

1. They are likely to succeed on merits
2. They are likely to suffer irreparable harms
3. The balance of equities favors them
4. An injunction is in the public interest

Abelson wrote in his order that Kalshi “has not shown that when Congress enacted and amended the CEA” that it intended to preempt state gaming laws when sports bets are made on the company’s platform.

Kalshi, Abelson notes, did not satisfy all four factors for a preliminary injunction.