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Prediction markets are all the rage right now. Hate em, love em, everyone has an opinion on them, that’s for sure.
Some bettors are choosing to bet on these markets rather than top mobile betting apps. Some states are allowing them to function freely, others are trying to clamp down on them.
This is because prediction markets moonlight as sportsbooks, but without any of the existing sports betting regulation. These prediction markets offer tied to real-world events like inflation data, political outcomes, and yes, sports too.
Maryland is in the camp that wants prediction markets gone. Recent news has come out of the state, and they’re coming after Kalshi — the leading prediction market in the business.
Maryland Takes Air Out Of Kalshi
This just happened in August. Turns out, the United States District Court for the District of Maryland blocked Kalshi from getting the protection it wanted. The company had filed a motion for a preliminary injunction that would have shielded it from state enforcement while courts sorted out the bigger question of whether its sports-related contracts were lawful.
Kalshi leaned heavily on the argument that, as a CFTC-designated contract market, it fell under federal oversight and should be shielded from state gambling enforcement. The Maryland court didn’t buy it, though. Instead, the judge ruled that Kalshi had not shown a likelihood of success on the merits of its case and stressed the strong presumption against federal preemption. In other words, unless Congress clearly intended to strip states of their power to regulate gambling within their borders, Maryland was not about to give up its authority.
That puts Kalshi in a precarious position. While courts in Nevada, New Jersey, and even Washington, D.C., left the matter in the hands of the CFTC, Maryland went the opposite direction. If other states follow that lead, Kalshi — and other prediction makers — could face a patchwork of restrictions that undercut its plan to scale nationwide. At that point, it would be no better than the legal sports betting market, which also has different regulations and limits across the country.
Why Maryland Took Different Action Than Nevada and New Jersey
As mentioned, Maryland’s decision was a sharp departure from the likes of Nevada and New Jersey — the two states that’ve most protected their legal betting industries. So what gives?
In Nevada and New Jersey, federal judges were willing to preserve the status quo. They agreed that the Commodity Exchange Act preempts state laws in this area, meaning disputes over Kalshi’s event contracts should be handled by the CFTC, not their own state gaming commissions.
Maryland viewed that reasoning as far too broad. The court pointed to several factors that undercut Kalshi’s preemption claim. For one, the Commodity Exchange Act contains a “Special Rule” prohibiting event contracts that involve activities deemed unlawful under state law. That clause alone suggests Congress expected state gambling laws to coexist with the federal framework, not be overridden by it.
The Maryland judge also highlighted the state’s inherent interest in regulating gambling and questioned why Kalshi couldn’t simply apply for a sports betting license in Maryland. By that logic, the issue isn’t whether Kalshi is regulated at the federal level, but whether its operations fit within state gambling frameworks. The divergence sets up a messy clash between states and federal regulators that might have to be settled by an appeal sooner rather later.
How Kalshi Is Planning for a Big Football Season with More Markets
Despite the legal uncertainty, Kalshi is charging ahead with football betting plans. The exchange has already launched markets on NFL preseason winners, generating roughly $9 million in trading volume through just two weeks. Now it’s rolling out spreads, totals, and touchdown props for both college and professional football, hoping to capture even more action.
The timing is deliberate. Football is the king of betting in the United States by a mile. By expanding its offerings right before kickoff, Kalshi is positioning itself as a direct competitor — at least in perception — to regulated sportsbooks like BetMGM or DraftKings.
Believe me, these competitors are keeping close tabs on Kalshi and other prediction markets like Polymarket. On recent earnings calls, nearly every sportsbook CEO mentioned the rising industry. If Kalshi begins to seriously eat into market share — or if it wins a decisive legal victory that clarifies its status — sportsbooks won’t hesitate to respond with their own federally regulated products, trust us.
But…. Maryland’s decision shows that states are not ready to cede their power over gambling just yet. If that sentiment spreads, Kalshi could be forced to fight state-by-state battles instead of focusing on building its user base. On the other hand, if appeals courts side with Nevada and New Jersey, the exchange might get the clarity it needs to go fully national.
For now, the only sure thing is that Kalshi plans to be in the football mix this fall. Whether it becomes a true sportsbook alternative or gets sidelined by state regulators will depend on how the next round of legal fights play out. Maryland betting was one loss, but there are more battles ahead.
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