Montana has agreed to suspend enforcement of its gambling laws against Kalshi while the prediction-market operator seeks further review of a Ninth Circuit ruling on sports-event contracts. Kalshi has in turn dropped its Montana lawsuit.
Under a five-page joint stipulation, the state will not pursue enforcement, investigations, cease-and-desist proceedings or other administrative action against Kalshi until the Ninth Circuit denies further review or issues an en banc decision. CDC Gaming reported that Montana must give the company 30 days’ written notice before starting action after such a decision is announced.
The arrangement is tied to Kalshi’s Sept. 9 petition for rehearing of the Ninth Circuit’s consolidated Nevada case. The court’s Aug. 28 decision had allowed Nevada to enforce its gambling laws against Kalshi’s sports-event contracts, according to InGame.
In its unanimous opinion in KalshiEX, LLC v. Assad, the Ninth Circuit affirmed the dissolution of a preliminary injunction that had favoured Kalshi and remanded part of the company’s action against the Nevada Gaming Control Board. The panel held that Kalshi had not shown it was likely that the Commodity Exchange Act pre-empted state gaming regulation as applied to its sports-event contracts.
Kalshi had argued that it was a designated contract market offering lawful event contracts rather than a sports-betting platform. The court rejected what it called the company’s overly broad reading of the Commodity Exchange Act. It also noted that a CFTC regulation categorically prohibits swaps involving, relating to or referencing gaming when based on an excluded commodity.
A Montana federal district judge had denied Kalshi’s request for a preliminary injunction in late August. A constitutional law professor told InGame that the stay of the Ninth Circuit ruling prevented most states from moving forward with enforcement.
