Case 1:25-cv-01283-ABA Document 26 Filed 05/09/25 Page 30 of 36
C. Federal Preemption is Not Applicable to Maryland’s Regulation of Kalshi’s Gaming Devices.
A strong presumption exists against preemption. “[A]ll preemption cases ‘start with the
assumption that the historic police powers of the States were not to be superseded by the Federal
Act unless that was the clear and manifest purpose of Congress.’” Sikkelee v. Precision Airmotive
Corp. , 822 F.3d 680, 687 (3d Cir. 2016) (quoting Wyeth v. Levine , 555 U.S. 555, 565 (2009)).
Applying even this baseline presumption, courts must disfavor preemption when faced with two
plausible readings of a statute. Bates v. Dow Agrosciences LLC , 544 U.S. 431, 449 (2005); see
also Bruesewitz v. Wyeth, Inc. , 561 F.3d 233, 240 (3d Cir. 2009). This presumption is even stronger
when Congress has legislated “in a field which the States have traditionally occupied.” Medtronic,
Inc. v. Lohr , 518 U.S. 470, 485 (1996); Pennsylvania v. Navient Corp. , 967 F.3d 273, 288 (3d Cir.
2020) (same).
The Supreme Court and Fourth Circuit have recognized that state gambling regulations are
core, traditional police powers. See Ah Sin v. Wittman , 198 U.S. 500, 505–06 (1905) (“The
suppression of gambling is concededly within the police powers of a state.”); WV Ass’n of Club
Owners & Fraternal Servs., Inc. v. Musgrave , 553 F.3d 292, 302 (4 th Cir. 2009) (“[R]egulating
gambling is at the core of the state’s residual powers as a sovereign in our constitutional scheme.”);
Johnson v. Collins Entm’t Co., Inc. , 199 F.3d 710, 720 (4th Cir. 1999) (same); see also Murphy ,
584 U.S. at 458-59. Gambling is a potentially harmful “vice activity,” and states have an interest
in reducing “the social costs associated with” it, Greater New Orleans Broad. Ass’n, Inc. v. United
States , 527 U.S. 173, 185 (1999), to promote the “welfare, safety, and morals” of their citizens,
Artichoke Joe’s Cal. Grand Casino v. Norton , 353 F.3d 712, 737) (9th Cir. 2003).
Given Maryland’s core, traditional interest in policing gambling, a “plausible reading” of
the CFTC’s “exclusive jurisdiction,” 7 U.S.C. § 2(a)(1)(A)), is that Kalshi’s gaming devices do
24
Made with FlippingBook - Online catalogs