Case 1:25-cv-01283-ABA Document 29 Filed 05/19/25 Page 16 of 17
cannot make because they are preempted.” Hendrick , 2025 WL 1073495, at *7; see also Flaherty , 2025 WL 1218313, at *7. Defendants do not meaningfully contend otherwise. First , Defendants claim that the public interest favors them because Kalshi “undercuts” sportsbooks and “endangers” the state’s tax revenue. But Maryland is not entitled to tax revenue from an activity that it is preempted from regulating, and whether Kalshi threatens Maryland’s “thriving gaming industry” (at 29) is irrelevant because Defendants have no authority to regulate trading on a DCM. See Flaherty , 2025 WL 1218313, at *6 (rejecting the same argument). Second , Defendants claim (at 29) that “Kalshi’s unlicensed business has not demonstrated that it has the necessary integrity, financial stability, and responsible gaming practices to ensure that Marylanders are not preyed upon.” But Kalshi is licensed federally, and federal law imposes a panoply of consumer-protection requirements on DCMs. Kalshi proactively complies with the federal “Anti-Money Laundering (AML) and Know Your Customer (KYC) protections” that Defendants identify (at 16). See KalshiEX LLC Rulebook , KalshiEx, at 3.5(a), 3.4(c), 3.6(g). 6 Kalshi must also maintain its own investigation mechanisms and processes for addressing customer complaints. 17 CFR § 38.158. And federal law requires Kalshi’s contracts to be fully collateralized via a clearinghouse that maintains its own funds and pays amounts due to traders. See DTCC Data Repository (U.S.) LLC v. CFTC , 25 F. Supp. 3d 9, 12 (D.D.C. 2014). The question in this case is not whether Kalshi should be subject to regulation, but rather by whom. Congress’s answer is clear: The CFTC has exclusive jurisdiction. CONCLUSION For the foregoing reasons, the Court should grant a preliminary injunction.
6 Available at: https://kalshi-public-docs.s3.amazonaws.com/regulatory/rulebook/ Kalshi%20Rulebook%20v1.17.pdf.
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