USCA4 Appeal: 25-1892
Doc: 16
Filed: 10/15/2025
Pg: 63 of 97
resemblance to Power v. Arlington Hospital Association , 42 F.3d 851 (4th
Cir. 1994), the only decision cited by the district court to support its reading,
which involved a statute that did not grant exclusive jurisdiction to a federal
regulator and instead expressly preserved “ damages available for personal injury under the law of the State ” at issue. Id. at 860.
Regardless, Kalshi’s sports -event contracts do not fall under the
unlawful-activity provision. The district court concluded that Kalshi’s
sports- event contracts “ violate Maryland sports-wagering laws and thus
constitute an ‘ activity that is unlawful ’ under state law .” JA165. But “ the only
workable interpretation ” of the Special Rule’s reference to unlawful activity
“refers to the underlying event rather than the act of staking money on that event. ” Flaherty , 2025 WL 1218313, at *5. Otherwise, because “ many states define unlawful gambling as staking money on any contingent outcome ,” every event contract would fall within the unlawful-activity provision, an interpretation that “ no one would contend ” is “ plausible. ” KalshiEX , 2024 WL 4164694, at *12. The question is whether the sports events underlying
Kalshi’s contracts are lawful in Maryland. Because they are, Kalshi’s sports -
event contracts fall outside the unlawful-activity provision.
The district court cited the Special Rule’s legislative history, but that
history undermines its holding. Senators Feinstein and Lincoln made clear
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