USCA4 Appeal: 25-1892
Doc: 16
Filed: 10/15/2025
Pg: 34 of 97
exchange is not the counterparty to any trade, and prices are set by supply
and demand rather than by the exchange. JA38-39. Traders enter into
trades against other traders, and they may exit their positions according to
movements in the market. Because DCMs like Kalshi lack incentives to offer
trades to favor themselves and disfavor traders, the comprehensive federal
scheme governing DCMs focuses on preventing market manipulation and disruption and ensuring market efficiency nationwide. See 17 C.F.R. §§ 38.250, 38.151. III. P ROCEDURAL H ISTORY On April 7, 2025, the Maryland Lottery and Gaming Control
Commission sent Kalshi a cease-and- desist letter, claiming that Kalshi’s
sports- event contracts are “indistinguishable” from sports wagers and thus
unlawful without a Maryland sports-wagering license. JA65-66. The letter
demanded that Kalshi cease its “illegal offerings” in Maryland within 15 days
of receipt. JA66. Faced with the prospect of civil and criminal enforcement,
Kalshi brought this suit on the ground that the CEA preempts state
regulation of trading on DCMs. Kalshi also sought a preliminary injunction.
Before the district court ruled on Kalshi’s motion , two other federal
district courts issued injunctions preventing two other states — Nevada and New Jersey — from enforcing their gambling laws against Kalshi. KalshiEX,
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