Federal judge John A. Martin denies Kalshi injunction against Maryland regulator

Prediction market company loses court battle over state cease-and-desist order targeting sports wagering operations

Federal Judge John A. Martin rejected Kalshi’s emergency court requests this week. The prediction market provider had filed both a temporary restraining order and preliminary injunction against Maryland’s gaming commission.

KalshiEX LLC faced off against the Maryland Lottery and Gaming Control Commission (MLGCC). The state regulator issued Kalshi a cease-and-desist order back in April.

MLGCC director John Martin authored the original enforcement action. Despite the shared name, he’s a different person from the federal judge who ruled on the case.

The company operates prediction markets where users can trade on various outcomes. But Maryland regulators say these activities cross into prohibited sports wagering territory.

Why Maryland Regulators Issued the Cease-and-Desist Order

The MLGCC argued Kalshi lacks proper authorisation to operate in Maryland. State officials contend the company is conducting sports wagering without required licenses or approvals.

“Kalshi is operating in Maryland and is offering and conducting what is, in fact, wagering on sporting events,” director Martin wrote in the cease-and-desist letter.

Maryland law requires specific licensing for sports wagering operations. The regulator identified three violations in Kalshi’s activities.

First, Kalshi doesn’t hold a sports wagering license from the commission. Second, its wagers haven’t received commission approval. Third, it lacks authorisation under Maryland law to offer wagers on sporting events.

What Happened in Federal Court

Kalshi filed suit claiming the MLGCC violated constitutional principles. The company alleged regulators were “unconstitutionally threatening to prohibit trading” of its sports-event contracts in Maryland.

The federal court disagreed with Kalshi’s constitutional arguments. Judge Martin ruled that Kalshi’s services to Maryland players qualify as “unlawful” under current regulatory standards.

Both of Kalshi’s emergency requests were denied. The temporary restraining order application failed, as did the preliminary injunction request.

This means the MLGCC’s cease-and-desist order remains active. Kalshi cannot offer its prediction markets to Maryland residents while the dispute continues.

The court’s decision validates the state regulator’s interpretation of gambling laws. It also affirms the MLGCC’s authority to enforce licensing requirements.

How This Ruling Differs From Other State Outcomes

Maryland’s decision creates a split in how courts handle Kalshi’s regulatory challenges. The company previously won similar legal battles in Nevada and New Jersey.

Those earlier victories had established precedent for Kalshi’s business model. The company successfully argued its services didn’t constitute traditional gambling in those jurisdictions.

But Maryland’s different outcome shows state gaming laws vary significantly. Each jurisdiction applies its own standards for what constitutes sports wagering.

The ruling demonstrates that regulatory approaches to prediction markets remain inconsistent nationwide. Some states accept these operations while others actively prohibit them.

This creates operational challenges for Kalshi and similar companies. They must navigate different legal frameworks in each state where they want to operate.

The decision may encourage other states to take harder stances against prediction market operators.

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