Case 1:25-cv-01283-ABA Document 26 Filed 05/09/25 Page 7 of 36
INTRODUCTION
A s it has done in other states, Kalshi is attempting to circumvent Maryland’s robust
regulation of sports wagering by labelling the placement, purchase, and sale of sports wagers on
Kalshi’s market as “event contracts” and claiming that federal preemption prohibits Maryland
from regulating Kalshi’s sports wagering business . Preemption, however, simply doesn’t apply.
First, Kalshi’s sports wagering contracts (“gaming devices”) are not within the “exclusive
jurisdiction” of the Commodity Futures Trading Commission (“CFTC”) because they are neither
“swaps” nor “ contracts of sale of a commodity for future delivery ” under the Commodity
Exchange Act (“CEA”). 1 Kalshi’s gaming devices are not swaps or commodity futures within the
ordinary meaning of the text, the application of several canons of statutory interpretation, and an
examination of its legislative history. Second, even if they were “swaps” or commodity futures,
K alshi’s gaming dev ices are specifically prohibited by CFTC regulation from being listed on a
designated contract market . Since Kalshi’s gaming devices are prohibited from such listing, they
are outside the CFTC’s exclusive jurisdiction, and Maryland may regulate them. Kalshi, and two
previous district courts, did not address, and cannot satisfy these predicate issues.
Kalshi’s pree mption arguments are a red-herring to distract this Court from the fact that its
gaming devices are prohibited under federal law and illegal under Maryland law. In previous court
filings, Kalshi admitted that the term “gamin g, ” as it is used in the CEA and the CFTC’s
regulations, was intended to include sports wagering. Based on its disregard for the applicable
law, any Hobson’s choice facing Kalshi as a result of the Cease and Desist letter was of its own
making, and it should not be rewarded for its misconduct with injunctive relief. The balance of
1 7 U.S.C. §§ 1 – 27f.
1
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