Kalshi's streak of legal wins might come to an end in Maryland as Judge Adam Abelson pokes holes and finds contradictions in the prediction market operator's legal arguments.
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Kalshi is fighting Nevada, New Jersey, and Maryland in courts after the respective states sent the prediction market operator cease-and-desist letters on the grounds that Kalshi's sports event contracts skirted their sports gambling laws.
Flip-Flopping Across State Lines
The first issue Judge Abelson saw was that the company's stance had changed regarding sports event contracts.
In D.C., where Kalshi fought the Commodity Futures Trading Commission (CFTC) regarding its political event contracts, Kalshi argued that political event contracts were not gaming. And, that the Dodd-Frank Act, through the Commodity Exchange Act (CEA), meant for "gaming" to be defined as sports betting.
Now, Kalshi is arguing that sports event contracts are not gaming despite their previous statements in D.C.
Kalshi CEO Tarek Mansour defended his platform against the gaming narrative in an interview with Axios, saying that if prediction markets are gambling, so is trading stocks.
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"I just don't really know what this has to do with gambling. If we are gambling, then I think you're basically calling the entire financial market gambling." - Tarek Mansour, Kalshi CEO |
Are Kalshi And The CFTC Truly Exclusive?
The main argument Kalshi has made in its legal battles is that state laws do not apply to it as a CFTC-regulated entity. In fairness, it's an argument that has served Kalshi well with wins in Nevada and New Jersey, where judges have abdicated any decisions to the federal regulator.
Judge Abelson casts doubt on the CFTC's "clear" exclusive jurisdiction over Kalshi. The Judge believes that the exclusivity language found in the CEA under Section 2 (a)(1)(A) relates to other federal agencies.
Judge Abelson questions whether the "exclusive jurisdiction" language in Section 2(a)(1)(A) of the Commodity Exchange Act means that the CFTC's jurisdiction is "exclusive" only with respect to other federal agencies (such as the SEC), and not state agencies. pic.twitter.com/6I8VUHBeBR
— Daniel Wallach (@WALLACHLEGAL) June 5, 2025
A few tweets later, Daniel Wallach points to language in the CEA stipulating that "Nothing contained in this section shall supersede or limit the jurisdiction at any time conferred on the SEC or other regulatory authorities under the laws of the United States or of any state."
In New Jersey, Judge Edward Kiel provided a different and more detailed interpretation of Section 2 (a)(1)(A):
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"The second sentence [of Section 2 (a)(1)(A)] therefore merely preserves SEC and state authority over contracts that are not subject to the CFTC’s exclusive jurisdiction. -Judge Edward Kiel, New Jersey District Court |
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What's Next For Kalshi In Maryland?
Judge Abelson didn't provide a ruling from the bench, instead asking for supplemental briefings from both sides to help them make a decision. Those supplemental briefs are due by June 13th, with a ruling on Kalshi's request for a preliminary injunction possibly coming in July.
In Nevada, Kalshi successfully argued for a preliminary injunction against the Nevada Gaming Control Board's (NGCB) cease-and-desist letter. However, the Nevada Resort Association (NRA) has been allowed to intervene in that case. That brings a powerful ally to the NGCB's side.
Multiple legal fights across several states could be creating cracks in Kalshi's case and harming its chances in the future.
