Press Release: Kalshi’s Legal Battle with Maryland Lottery Deepens Over Sports Betting Jurisdiction
In a significant legal showdown, Kalshi, an event prediction platform, is facing tough scrutiny in federal court regarding its claims about sports betting event contracts and their jurisdiction. During a recent hearing, U.S. District Judge Abelson challenged Kalshi’s contradictory stances, particularly in light of its previous arguments against the Commodity Futures Trading Commission (CFTC).
Kalshi has initiated several lawsuits against state regulators, including the Maryland Lottery and Gaming Control Commission (MLGCC), which asserts that the platform’s sports prediction contracts amount to illegal gambling. Kalshi maintains these contracts should be classified as legitimate derivatives overseen by the CFTC, contrasting sharply with its past claims that sporting event outcomes lack economic significance.
Judge Abelson called for supplemental briefs from both parties, seeking clarity on Kalshi’s evolving positions and the implications of the Commodity Exchange Act (CEA) regarding state versus federal jurisdiction. The court highlighted prior remarks by Senator Lincoln, expressing concerns about the gambling nature of such events, suggesting Congress did not intend to preempt state regulations.
Key to the court’s deliberation is whether Kalshi’s contradictory stances could invoke the doctrine of judicial estoppel, potentially undermining its defense against state regulations. As the case progresses, outcomes in Maryland could reverberate across other states where Kalshi seeks regulatory clarity.
A favorable ruling for Kalshi could exempt it from state gambling laws, reinforcing its federal regulatory framework. Notably, any changes within CFTC leadership may also influence the case as potential new chairperson Brian D. Quintenz is currently on Kalshi’s board. The court’s decisions in this pivotal case could reshape the landscape for event prediction platforms and their regulatory oversight in the evolving sports betting market.
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