The Kalshi sports betting or prediction markets saga continued this week after the company filed a federal lawsuit against the Maryland Lottery and Gaming and Control Commission.
The move came after the regulatory body sent cease-and-desist letters to keep the company from offering sports event contract trading in the state.
In the suit, Kalshi claimed Maryland’s move violated federal law and the company sought an immediate temporary restraining order and an injunction hearing. Kalshi used similar lawsuits against Nevada and New Jersey after the state regulatory bodies began taking action against the company.
The suit proved successful in Nevada, where a federal judge issued a temporary restraining order and preliminary injunction.
Kalshi claims its offerings should not be seen as traditional online sports betting. Instead, the contracts are regulated by the Commodity Futures Trading Commission, not state gaming regulators. The company is now seeking a similar result in Maryland as in Nevada.
“The MLGCC’s actions threaten irreparable harm to Kalshi, and unless these actions are enjoined, will result in the sort of state-by-state patchwork of regulation that Congress sought to prevent when it subjected CFTC-regulated exchanges to exclusive federal regulation,” the lawsuit notes.
In the suit, Kalshi makes note of the Nevada ruling. The legal team explained how the judge ruled, at least preliminarily, that Kalshi “is subject to the CFTC’s exclusive jurisdiction and state law is field preempted.”
Several states have argued that the prediction markets are nothing more than a type of sports betting and have issued cease-and-desist letters meant to stop Kalshi from offering the markets in their states. Some of those that have issued orders or begun investigating include Nevada, New Jersey, Maryland, Montana, Illinois, Ohio, and Michigan.
New Jersey alleged Kalshi and its partner in the markets, Robinhood, were “listing unauthorized sports wagers for individuals located within the State of New Jersey. This activity constitutes a violation of the New Jersey Sports Wagering Act, which only permits licensed entities to offer sports wagering to patrons located in New Jersey.”
Kalshi seems ready for the legal battles ahead and recently named a former executive with the American Gaming Association as the head of corporate development, leading the company’s public affairs, government relations, and communication with sports leagues.
