Lawmakers in Maryland have pushed forward two gambling bills, HB 1226 and HB 295, sending both to the Senate for review.House Bill 1226 is the Maryland Illegal Online...
Kalshi to face legal issues as Maryland court sides with gambling regulators
Kalshi, a prediction market platform, suffers its first major legal issue as the Maryland federal court sides with the state’s gambling regulators.
In a Memorandum Opinion signed by US District Court judge Adam B. Abelson, Kalshi was said to have failed to show “a likelihood of success on the merits of its claim” that the federal Commodity Exchange Act (CEA) pre-empts Maryland’s gaming laws.
The court rejected Kalshi’s Motion for a prior request to prevent the Maryland Lottery and Gaming Control Agency and the Maryland Lottery and Gaming Control Commission from pursuing civil and criminal enforcement of state gaming laws against Kalshi.
Maryland’s decision clashes with other states, including Nevada and New Jersey, which have previously sided with Kalshi over state regulatory bodies.
Kalshi, which is registered with the Commodity Futures Trading Commission (CFTC), launched sports contracts earlier this year under a self-certification process permitted by the CEA. These contracts allowed users to bet “yes” or “no” on outcomes such as whether given teams would progress in the NCAA basketball tournament, or who would win the US Open Golf Championship.
Kalshi highlighted that they are authorized under federal law. However, critics argue that sports-based event contracts are actually unlicensed sports betting.
Maryland regulators issued a cease-and-desist letter in April, warning that Kalshi’s products amounted to unlicensed sports betting and violated state law, which requires sports betting operators to be licensed and comply with strict advertising, age verification, and data security standards.
Kalshi claimed that Maryland’s enforcement was invalid due to federal preemption by the CEA.
Judge Abelson argued:
“It is well recognised that regulating gambling is at the core of the state’s residual powers as a sovereign in our constitutional scheme… The courts and Congress have long recognised states’ authority to regulate gambling conducted within their borders.
Kalshi has not shown that when Congress enacted and amended the CEA, it intended to preempt state gaming laws when sports wagers are made on a platform like Kalshi’s.”
Judge Abelson further added that Kalshi could simply “obtain a mobile sports wager licence in Maryland, while still being able to comply with federal regulatory requirements imposed by the CEA and CFTC”.
Total casino revenue across Maryland’s six land-based properties reached $162.1 million in October, representing a 1% increase, or $1.5 million more than the same month in...
