Kalshi Faces More Pressure as Maryland Gambling Regulator Fights Back

Kalshi may have won temporary reprieves in several states across the country, but gambling watchdogs aren’t backing down. Instead, they’re preparing for the next stage of what’s shaping up to be a prolonged legal saga.

Kalshi’s argument is simple: “We are subject to federal regulation under the purview of the Commodity Futures Trading Commission (CFTC).”

Gambling regulators aren’t convinced. Earlier this year, multiple states, through their gaming oversight bodies, launched a series of legal challenges against Kalshi, disputing its right to offer prediction markets on sports outcomes.

Kalshi Already Experienced Challenging Gambling Regulators

The company has already won legal arguments in Nevada and New Jersey, although it will certainly face more challenges, with the regulators seeking to .          

Advocates for prediction markets argue that, since Kalshi doesn’t set odds itself and instead offers contracts based on future events, it shouldn’t fall under state gambling laws. Still, the reality remains: call it what you will, prediction markets fulfill the same core function as sports betting—they allow users to wager on game outcomes.

The difference? Kalshi has found a legal pathway to operate without the burdensome regulations that traditional gambling firms face.

As the legal back-and-forth continues, the Maryland Lottery and Gaming Control Commission (MLGCC) is pushing back hard. The commission is building its legal case to oppose a temporary injunction Kalshi has requested: an effort to retain the right to offer sports-related prediction markets in Maryland after the state issued a cease-and-desist letter.

“Kalshi now cries crocodile tears and exclaims that it is being forced into ‘a Hobson’s Choice’ by the cease-and-desist letter,” one filing states, eschewing legal decorum in favor of a direct rebuke.

Maryland contends that Kalshi’s markets are based purely on game outcomes, not on events with economic consequences, and therefore do not qualify as “swaps” or “economic event contracts” under CFTC jurisdiction.

State Lawyers Prepare to Push Back

State lawyers further argue that Kalshi’s markets cannot be considered legitimate hedging tools, undermining the company’s claim to operate as a bona fide prediction market. Instead, Maryland says, the platform merely facilitates speculative wagering—functionally indistinguishable from sports betting.

No winner has currently emerged, with Kalshi definitely enjoying a few early wins in the argument, but the future of prediction markets is unclear. Kalshi argued a case and won against the CFTC when it wanted to feature prediction markets on politics.