Kalshi Withdraws Injunction Request in Maryland, Reaches Agreement with the State

Under the arrangement, Maryland has agreed to temporarily refrain from enforcing the state’s gambling laws against the prediction markets platform, effectively eliminating the need for an injunctionImage Source: Shutterstock.com

Prediction markets platform Kalshi has withdrawn its injunction request in Maryland following an agreement with the state. The two parties will now wait for the US Court of Appeals for the Fourth Circuitto rule on the matter.

MLGC Says Kalshi’s Products Are Sports Betting

The rapid growth of prediction markets has had the unintended effect of attracting significant regulatory and tribal scrutiny. Kalshi, as one of the biggest providers of such products, has thus found itself in hot water in several states.

While Kalshi has insisted that it is regulated by the Commodity Futures Trading Commission (CFTC) and is therefore not required to answer to state gambling regulators, many regulatory bodies have slammed its offerings as “unlicensed gambling.” Kalshi, which has insisted that its future events contracts are not gambling, has firmly stood its ground so far, emphasizing that it would change its approach only if asked by the CFTC.

Earlier this year, the Maryland Lottery and Gaming Commission(MLGC) issued a formal cease-and-desist letter to Kalshi, sparking the legal battle in the state. The regulator insisted that Kalshi offers unlicensed betting and that its products are indistinguishable from sports bets.

Maryland and Kalshi Reach Temporary Agreement

While a Maryland judge denied Kalshi’s earlier motion for а preliminary injunction against the state regulator, the prediction markets company followed up with another request. However, the request has now been withdrawn due to Kalshi reaching an agreement with state officials.

Under the arrangement, Maryland has agreed to temporarily refrain from enforcing the state’s gambling laws against the prediction markets platform, effectively eliminating the need for an injunction.

As a result, Kalshi can continue doing business as usual, with Maryland officials promising not to ngake any further action until the US Court of Appeals for the Fourth Circuit has had its say on the matter.

The appellate decision is expected to be issued more than two months following the opening briefing’s conclusion. Kalshi must submit its brief by September 15, with Maryland having until October 15 to respond.  

The dispute would ultimately decide whether Kalshi’s sports event contracts fall under Maryland’s sports betting regulations. A Kalshi loss here could potentially set a precedent for further regulatory pressures in other states.