A Maryland federal judge has denied Kalshi's request for a preliminary injunction regarding sports events contracts in the state. This action may signal the start of a losing streak for Kalshi, as it faces more cease and desist orders from several US states. On the other hand, it won injunctions against New Jersey and Nevada.

A federal judge in Maryland has denied Kalshi's request for a preliminary injunction that sought to prevent state officials from enforcing local gaming laws against its sports prediction market. The decision marks the first courtroom loss for Kalshi, which has previously won similar legal challenges in New Jersey and Nevada.

Kalshi, a federally regulated prediction market operating under the Commodity Futures Trading Commission, had argued that Maryland's gaming restrictions were preempted by federal law. However, Judge Adam Abelson of the US District Court for the District of Maryland rejected that argument, stating that Kalshi had failed to demonstrate a likelihood of success on the merits of its claim.

States push back against Kalshi's sports betting model

Maryland is one of seven states that have issued cease-and-desist letters to Kalshi, alleging the company's sports event contracts constitute illegal sports betting. In response, Kalshi has launched legal actions in three states in an effort to defend its right to operate. The federal court rulings in New Jersey and Nevada had given Kalshi momentum, but Judge Abelson's decision halts that streak - for now.

In his opinion, Abelson stated that Kalshi's contracts - even if assumed to be legal under the Commodity Exchange Act - do not clearly override state gaming laws. The ruling emphasized that Maryland has a long-standing regulatory interest in overseeing gambling within its borders and that federal law must show clear intent to preempt state oversight, which Abelson concluded it does not.

Legal observers say ruling centers on federalism

Legal experts noted that Judge Abelson deliberately avoided ruling on whether Kalshi's sports contracts qualify as 'swaps' under federal law - a key technical point in the case. Instead, he focused on the broader issue of federal preemption.

Attorney Andrew Kim, who has closely tracked Kalshi's legal disputes, praised the court's approach. Judge Abelson rightly refused to presume that federal commodities law completely displaces traditional state gambling regulation, Kim said. He's saying the burden is on Kalshi to show Congress intended to break apart state authority - and that burden hasn't been met, he added.

Abelson's ruling noted, "Kalshi has failed to show a likelihood of success on the merits of its claim that the Commodity Exchange Act preempts Maryland's gaming laws." He added that without meeting this threshold, the court would not examine other elements required for an injunction, such as irreparable harm or the public interest.

Kalshi vows to appeal quickly

Despite the setback, Kalshi signaled that it would not back down. In a statement, a company spokesperson said, "We are disappointed with the court's decision and will move for an immediate stay of the ruling. We are on the right side of the law, and ultimately expect to prevail in this fight."

Legal analysts expect Kalshi to appeal the ruling to the US Court of Appeals for the Fourth Circuit. A request for emergency relief could result in a temporary block on Maryland's enforcement efforts while the appeal is underway.

Implications for prediction markets nationwide

The Maryland decision introduces new uncertainty for Kalshi and other companies aiming to offer prediction-based contracts in sports and politics. The case could become a test of the limits of federal commodities regulation versus state gambling authority, especially if courts offer conflicting views.

While Kalshi remains determined to push forward, this ruling demonstrates the legal complexity of bridging financial markets and traditional gambling regulation - and that the fight is far from over.