Kalshi’s sports event contracts will remain available in Maryland at least until the Fourth Circuit rules on the prediction market’s appeal for an injunction, as the state opted to pause its enforcement of state gambling laws until the appeal decision is made.
Earlier this month, Judge Adam B. Abelson of the U.S. District Court for the District of Maryland denied Kalshi an injunction that would have allowed it to keep offering sports event contracts in the state. It was the first major legal defeat for the exchange, having won similar injunctions in New Jersey and Nevada.
Abelson determined that while the federal Commodity Exchange Act supersedes state laws when it comes to commodities regulation, this was not the case for state betting laws. In addition, he argued that Kalshi would be free to obtain a sports betting license in order to offer sports event contracts in Maryland, if it wished to do so.
Kalshi swiftly appealed the decision, raising the matter to the Fourth Circuit Court of Appeals. In addition, it called for a new injunction, which would allow it to keep offering sports event contracts until the Fourth Circuit makes its decision.
It argued that it couldn’t reasonably be expected to comply with Maryland’s sports betting laws in the short space of time before the Fourth Circuit decision, and made the case that the legality of its sports event contracts was at minimum a matter for debate.
In the meantime, there is no order currently in place that would prevent Maryland from enforcing its cease-and-desist. However, if Kalshi’s sports event contracts were shut down in the state, only for the District Court decision to be overturned, the prediction market may potentially be able to sue for damages. Further litigation over another injunction would have also used up time and resources for both parties.
Following the District Court decision, representatives for Kalshi and Maryland have been in discussion.
Kalshi and Maryland reach agreement
On Wednesday, Kalshi issued a new filing, withdrawing its motion for the new injunction, after reaching an agreement with the state that would make such an injunction unnecessary.
d54e0d65-325f-418a-84a3-c28c3e3df7d9According to the filing, the state has opted not to enforce “the relevant Maryland laws against Kalshi” until the Fourth Circuit makes its decision on Kalshi’s appeal of the District Court’s injunction decision.
“That assurance of nonenforcement has rendered an injunction pending appeal unnecessary,” Kalshi said. “Kalshi accordingly withdraws its motion seeking that relief.”
Kalshi’s opening brief in the Fourth Circuit case is due by Sept. 15, and Maryland’s response by Oct. 15. It’s therefore likely that the Fourth Circuit’s decision — after which Maryland may start enforcing its laws again, if the court’s decision goes its way — will not take place for more than two months.
The docket for the case shows that Kalshi’s motion was filed incorrectly. However, Kalshi will have the opportunity to refile.
