Kalshi Challenges Maryland’s Cease-and-Desist in Federal Court

Another Bold Legal Swing

The order aims to stop Kalshi’s sports event contracts, which the state calls illegal betting. Kalshi, backed by a $500 million March Madness volume, argues its CFTC-approved contracts are legit derivatives, not bets.

According to CEO Tarek Mansour’s comments, the company views its offerings as financial derivatives in the eyes of the CFTC, claiming federal authorization.

Kalshi’s suit, paired with requests for a temporary restraining order and preliminary injunction, claims Maryland’s actions violate federal law and the Constitution.

With a similar win in Nevada, where a judge halted state enforcement, Kalshi is pushing to keep its markets open in Maryland. The company tried negotiating a delay until the Nevada case wraps, but got no deal.

Federal vs. State Showdown

Kalshi’s big argument is federal preemption: as a CFTC-regulated platform, it’s untouchable by state gambling laws, per the Commodity Exchange Act.

Maryland’s order, Kalshi says, risks “irreparable harm” to its business and creates a messy patchwork of state rules Congress meant to avoid.

The Nevada ruling, where a judge upheld CFTC’s “exclusive jurisdiction,” bolsters Kalshi’s case. Wallach notes the Maryland case, assigned to Judge Adam Abelson, has a status conference set for April 23, 2025, to hash out timelines.

But Wallach flags a hitch: Kalshi once called its sports contracts “gambling” in CFTC filings, which could hurt its “public interest” argument.

CFTC’s Rule 40-11 bans contracts tied to “gambling” or illegal acts, and Wallach argues the agency’s inaction on enforcement weakens Kalshi’s stance.

Kalshi’s also suing in New Jersey, where a judge’s ruling on an injunction is pending.