WASHINGTON, D.C. — Cantrell Dumas, Director of Derivatives Policy at Better Markets, issued the following statement regarding the latest developments in KalshiEX LLC v. Martin, Case No. 1:25-cv-01283 (D. Md.), where KalshiEX is challenging the Maryland Lottery and Gaming Control Commission’s authority to regulate its sports gambling contracts under state law:
“The betting platform KalshiEX has launched a number of lawsuits to fend off any state regulation of its sports wagering contracts. It now claims that those wagers are actually legitimate derivatives contracts that should be overseen not by state gambling authorities but exclusively by the CFTC, the agency that regulates the futures and swaps markets. But anyone following this story must be feeling whiplash since Kalshi told a very different story in its earlier case against the CFTC. Better Markets recently sounded the alarm about Kalshi’s shifting legal narrative, pointing out that the CFTC-regulated exchange has been saying one thing in one federal courtroom and the exact opposite in another. Now, a federal judge in Maryland is pressing Kalshi to explain itself.
“In its recent lawsuit against the CFTC, in which Kalshi pushed to host bets on the outcome of political elections, Kalshi tried to justify the move by distinguishing that activity from pure gambling, like on sporting events. Kalshi, in that lawsuit, admitted that sports-event contracts are ‘gaming’ instruments lacking ‘financial, economic, or commercial’ consequences and therefore don’t generally belong on a regulated exchange like Kalshi’s. That was central to its claim that election gambling contracts are fundamentally different from sports wagers and should be allowed. Unfortunately, the court accepted Kalshi’s argument and ruled against the CFTC. But now, in its lawsuit against the Maryland Lottery and Gaming Control Commission, Kalshi is arguing that those same sports-event contracts are perfectly appropriate for trading on CFTC-approved derivatives exchanges. Moreover, it is claiming that state regulation of those contracts is actually preempted by federal law, notwithstanding the states’ expertise in closely overseeing the sports gambling industry.
“This pivot is no accident, and it has clearly raised serious questions for the court. The judge has asked for a supplemental briefing ‘to address the issue’ of Kalshi’s prior statements in the CFTC political event contract litigation. The short answer is that the law has not changed, but what has changed is Kalshi’s story, and now that story is being tested in open court. A derivatives exchange cannot speak out of both sides of its mouth and expect no one to notice. Fortunately, a federal judge has, and that scrutiny is on target.”
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