Maryland to delay enforcement against Kalshi pending federal appeals court decision

Maryland has agreed to pause enforcement actions against predictions market operator Kalshi until a Fourth Circuit Court of Appeals decision, expected to take at least two months following briefings due in September and October, in the ongoing dispute over the company’s sports event contracts.

The agreement led Kalshi to withdraw its motion for a new injunction in Maryland, with the company stating that the state’s assurance made the order unnecessary.

Dispute over federal and state authority

The legal dispute centers on whether Kalshi’s sports event contracts are subject to federal commodities regulation or state sports betting laws. Kalshi maintains it operates as a federally regulated “designated contract market” under the oversight of the Commodity Futures Trading Commission.

Maryland regulators have concluded the company’s products are “indistinguishable” from sports bets, which fall under state sports wagering regulations.

Under the Fourth Circuit’s briefing schedule, Kalshi’s opening brief is due Sept. 15, with Maryland’s response due Oct. 15. A decision could take more than two months. If the state prevails, it could resume enforcement.

Earlier federal court decision in Maryland

The agreement follows a ruling by Judge Adam B. Abelson of the US District Court for the District of Maryland, who denied Kalshi’s earlier request for an injunction that would have allowed the company to continue operating in the state.

Abelson wrote that the federal Commodity Exchange Act preempts state laws on commodities regulation but does not override state authority over betting laws. He also stated Kalshi could apply for a Maryland sports betting license if it wished to continue offering its sports event contracts in the state.

Kalshi appealed the decision to the Fourth Circuit and argued that compliance with Maryland’s betting laws before the appeal’s resolution was not practicable. Without an injunction or agreement, Maryland could have enforced a cease-and-desist order while the appeal was pending.

Similar proceedings in Nevada

Kalshi is also involved in a separate dispute in Nevada. In March, the Nevada Gaming Control Board ordered the company to halt operations under state sports betting laws. A federal court issued a preliminary injunction preventing Nevada from enforcing its order.

Last week, Flutter Entertainment executives appeared before the Nevada Gaming Board, where they addressed questions regarding a potential arrangement with Kalshi. However, no formal plans have been confirmed thus far.