Legal Action Taken: Kalshi Seeks Injunction Following Critical Defeat in Maryland
In a significant ruling, a federal judge in Maryland has determined that the Commodity Exchange Act (CEA) does not clearly preempt or strip states of their authority to regulate sports betting. This decision, made by U.S. District Judge Adam B. Abelson, rejects Kalshi's request for a preliminary injunction against Maryland's enforcement of state gaming laws.
The ruling hinges on Judge Abelson's finding that Kalshi failed to demonstrate a clear congressional intent in the CEA to override state gambling regulations. The judge emphasised the traditional power of states over gambling and stated that Kalshi did not meet the legal standard to prove federal preemption.
Kalshi's argument is based on its contracts being designated as contract market (DCM) products under the CEA and distinct from traditional gambling. However, the judge disagreed, holding that the CEA does not "clearly and manifestly" strip states of authority in this area.
Maryland has agreed to pause enforcement against Kalshi pending an appeal at the U.S. Court of Appeals for the Fourth Circuit, following the ruling. This decision creates a "circuit split" since earlier rulings in New Jersey and Nevada blocked state regulators from enforcing sports betting laws against Kalshi, setting the stage for possible Supreme Court review.
This ruling reflects ongoing tension between federal financial market oversight (CEA/CFTC jurisdiction) and states’ authority over gaming, with courts still resolving the boundary.
Michael Savio, a writer from Denver, has been covering the sports betting industry for over four years. As a dedicated journalist, he focuses on providing accurate and easy-to-understand information for readers. When he's not covering the industry or betting on sports, he explores Colorado. Currently, Michael covers the sports betting industry for Casino.com.
[1] https://www.bloomberg.com/news/articles/2022-08-16/kalshi-loses-bid-to-block-maryland-s-sports-betting-enforcement [2] https://www.insidesports.co/maryland-judge-rejects-kalshi-request-for-preliminary-injunction-against-marylands-enforcement-of-state-gaming-laws/ [3] https://www.sports Handle.com/maryland/2022/08/16/maryland-judge-denies-kalshi-preliminary-injunction-sports-betting-enforcement/ [4] https://www.legalsportsreport.com/2586/kalshi-loses-bid-to-block-maryland-sports-betting-enforcement-in-court/ [5] https://www.baltimoresun.com/business/bs-bz-kalshi-maryland-ruling-20220816-7jx75q5k7jh6x7qw576yq77qj-story.html
- "In light of the recent ruling, it appears that sports-betting companies may still be subject to state regulations, as a federal judge in Maryland has determined that the Commodity Exchange Act does not preempt states' authority in this area."
- "Michael Savio, a journalist covering the sports betting industry, emphasizes the ongoing tension between federal financial market oversight and states' authority over gaming, following the rejection of Kalshi's request for a preliminary injunction against Maryland's enforcement of sports betting regulations."
