Kalshi refuses to back down against state regulators and has filed a lawsuit in Maryland. This is in response to the cease-and-desist letter that the Maryland Lottery and Gaming Control Commission (MLGCC) sent on April 7th.
The cease-and-desist was due to be enforced on April 22nd, so Kalshi decided to sue. This follows similar moves in Nevada and New Jersey.
Kalshi claimed an initial victory in their case in Nevada with a judge granting an injunction. The company cited this in the lawsuit, which was posted on social media by legal expert Daniel Wallach. It read, “The U.S. District Court for the District of Nevada recently granted Kalshi a preliminary injunction in a substantially similar case.”
They went on to reassert that the Commodity Futures Trading Commission (CFTC) has authority, not state regulators, such as MLGCC. The lawsuit referenced that, “The CFTC declined to restrict Kalshi’s sports-event contracts.”
And added, “Unless and until the CFTC takes action on Kalshi’s sports-event contracts, they remain authorized under federal law.”
No plans to cease-and-desist
Kalshi received six cease-and-desist letters in relation to their growing number of sports event contracts. As well as Nevada, New Jersey, and Maryland, similar moves were made by Ohio, Illinois, and Montana. WIth the precedent set in Nevada, Kalshi will hope they can get the same results in all states.
They continue to claim that they can offer legal sports betting in all 50 states. State regulators argue the markets are sports betting, so must be properly regulated in the same way as sportsbooks.
Since receiving the cease-and-desist letters, Kalshi has ramped up its sports contracts. It now offers users the ability to trade predictions on NBA, MLB, and NHL matches.
Kalshi reaches out to MLGCC
Kalshi had tried to avoid another court hearing and urged the MLGCC to refrain from taking action until the case in Nevada concluded. In an email exchange, lawyers wrote, “we hope you will be willing to preserve the status quo and agree not to commence any enforcement action against Kalshi pending the outcome of the Nevada litigation”.
They also requested a meeting with the MLGCC to discuss the matter, writing, “At minimum, we would appreciate the opportunity to speak with you about this matter before you take any action to alter the status quo.”
A response on behalf on the MLGCC made clear they were not willing to negotiate.
It stated, “As outlined in our previous correspondence, you have until April 22, 2025, to confirm whether you will comply with the cease and desist letter or if you intend to continue. Please note that we will take appropriate actions based on your response.”
Kalshi’s response is to sue, and another judge will have to decide whether to follow the initial ruling in Nevada. New Jersey is also preparing their case against Kalshi and the state’s Attorney General sent a response this week.
The decisions in the cases will be decisive in showing other states how to deal with Kalshi and other prediction markets. The CFTC will also hold a roundtable next week on the topic of sports event contracts.
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