Kalshi lost its request for a temporary restraining order to keep it online in Maryland, but the event contract company also asked the court to swiftly make a decision to intervene and keep it online.
Unlike judges in Nevada and New Jersey, the judge in the Maryland District Court concluded that Kalshi did not stand a strong chance of success arguing its case the Commodity Exchange Act (CEA) and other federal laws supersede state laws when it come to sport betting.
With that ruling, the door is open for Maryland Lottery and Gaming to potentially enforce its cease and desist letter it sent to Kalshi earlier this year.
Kalshi says offlining only Maryland impractical
Judge Adam Abelson concluded in his ruling that it should not be a problem for Kalshi to obtain a sports betting license in the state. In its filing, Kalshi continued to disagree.
The complany argued that a short-term solution could potentially offline the entire site. Nontheless, Abelson declined to intervene.
“[Kalshi] would either have to cease offering its sports-event contracts exclusively in Maryland while leaving them in place elsewhere, running afoul of the impartial-access requirements imposed on Kalshi by federal law, or else it would have to cease offering its sports event contracts nationwide, which would be especially problematic given that Kalshi has obtained preliminary injunctions in two states permitting it to offer these very same contracts.”
Maryland sports betting law, as in most states, notes that wagers must stay within the state. With Kalshi’s exchange model, that would mean users could trade event contracts with other users located in Maryland.
Kalshi alleged that developing geolocation technology to accomplish that would take months as well as tens of millions of dollars.
Speaking practically, the process to be vetted and approved for a Maryland sports betting license would also be a relatively lengthy process.
Kalshi also argued potential CEA violations
In addition to feasability, Kalshi also argued on principle that removing a geographic area from its market would undermine the open market principles it agreed to as a designated contract market (DCM) regulated by the Commodity Futures Trading Commission (CFTC).
Kalshi is appealing its case to the Fourth Circuit Court.
