Kalshi appealing Maryland district court’s denial of preliminary injunctive relief

Kalshi has filed an appeal against the United States District Court for the District of Maryland with the US Court of Appeals in regards to its case against Maryland Lottery and Gaming Control Commission (MLGCC). 

The case comes after the MLGCC filed a cease-and-desist order against Kalshi, with Kalshi filing a temporary restraining order against the commission in April – a restraining order that was denied in August by a federal judge. 

Now, Kalshi is appealing, bringing the appeal to the higher court to reverse the Maryland court’s injunctive measures. 

The report explains that Kalshi is a CFTC-licensed and regulated exchange, meaning it is governed by federal law as opposed to state regulation. It offers contracts, where users can predict events to come with the chance of winning money, and as a CFTC-licensed operation, ‘federal law therefore bars Maryland from regulating Kalshi’s contracts under straightforward principles of both field and conflict preemption.’ 

Indeed, if Maryland were able to enforce its laws against Kalshi, so could every other state, the report argues. It goes on to say that the court ‘invoked various assumptions about congressional intent to fashion an extratextual “gambling” exception to the CFTC’s exclusive jurisdiction,’ which has not only been seen in Maryland, but other states as well, which have also called predictors unlawful gambling. To allow individual states to regulate such trades would ‘nullify the CFTC’s authority,’ it argues.  

The primary points of argument are that the Commodity Exchange Act (CEA) preempts Maryland’s gambling laws as they apply to Kalshi, and that these laws too are field preempted. It is also stated that Maryland law and the CEO conflict, with the report stating that ‘in at least three respects, complying with Maryland law would be “impossible” for Kalshi or pose an “obstacle” to the CEA’s purposes.’ Several other arguments were also suggested.  

Kalshi’s briefing concluded that, ‘This Court should reverse the district court’s denial of preliminary injunctive relief.’The predictions operator will now await the response from the MLGCC. 

Beth Turner

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