Kalshi has filed a lawsuit against the Maryland Lottery and Gaming Control Commission (MLGCC) just over two weeks after the state regulator sent the exchange platform a cease-and-desist order.
The company has argued that the MLGCC’s efforts to halt Kalshi’s offering of sports event contracts in the Old Line State violates federal law.
In turn, the New York-based company has requested an immediate temporary restraining order (TRO), as well as a hearing for a preliminary injunction.
Kalshi’s argument centres around the fact it is regulated at federal level by the Commodity Futures Trading Commission (CFTC), and that its offering does not constitute sports betting but instead peer-to-peer swaps.
Outlining the reasons behind its motion for a TRO and preliminary injunction, something Kalshi claims is “desperately needed”, the exchange’s suit notes: “The MLGCC’s actions threaten irreparable harm to Kalshi and its users, and unless these actions are enjoined, will result in the sort of state-by-state patchwork of regulation that Congress sought to prevent when it subjected CFTC-regulated exchanges to exclusive federal regulation.”
The 19-page request also states that the CFTC has yet to take definitive action against sports event contracts. A roundtable on the sector is due to be held on 30 April.
Kalshi has cited its recent legal battle with the Nevada Gaming Control Board (NGCB) within the suit.
That dispute saw the US District Court for the District of Nevada agree with Kalshi’s stance that a preliminary injunction against the NGCB was required until further clarity on the legality of the exchange’s offering is provided.
Kalshi highlighted Chief Judge Gordon’s verdict, which detailed that the prediction markets platform is “subject to the CFTC’s exclusive jurisdiction and state law is field pre-empted”.
Within the NGCB case, Chief Judge Gordon addressed the flurry of cease-and-desist warnings sent to Kalshi by state regulators and claimed it “highlights the problem of allowing the states to regulate a national exchange”.
It is a sentiment shared by Kalshi, with the company adding that the reason why the CFTC was granted the status of exclusive authority over the prediction markets sector was to avoid the problems that would arise from “different states subjecting Kalshi to conflicting rules”.
Last month, after filing the suits against both the NGCB and the New Jersey Division of Gaming Enforcement (DGE), Kalshi CEO Tarek Mansour publicly claimed that the cease-and-desist warnings represented a fundamental misunderstanding of the prediction markets sector.
“I can’t speak to why they are taking this action, but prediction markets have proven their use, so it is a shame that these authorities are still trying to censor them. We are left with no choice: sue,” he wrote on LinkedIn.
Sports event contracts have garnered significant controversy due to the similarities with traditional sports betting, though the contracts are available to be traded by any user aged 18 and over in all 50 US states, including those which have not yet legalised sports betting.
In the cease-and-desist warning issued to Kalshi by the MLGCC, the regulator’s agency director John Martin noted the process of trading the contracts based on a user’s prediction of a certain outcome is “indistinguishable from the act of placing a sports wager”.
The post Kalshi files lawsuit against Maryland regulator over causing “irreparable harm” first appeared on EGR Intel.
New York-based exchange platform submits its third suit against a state-level authority and requests a temporary restraining order as legal battle continues to ramp up
The post Kalshi files lawsuit against Maryland regulator over causing “irreparable harm” first appeared on EGR Intel.