The prediction market industry is facing a pivotal moment as multiple high-profile legal cases unfold across the United States. In our inaugural episode of Prediction News Roundup, host Chris Gerlacher and legal analyst Daniel Wallach, a leading sports betting lawyer, break down the most significant updates in Kalshi court cases against Maryland, Nevada, and New Jersey. They also preview the upcoming Brian Quintenz CFTC Chair confirmation hearing that could further impact the regulatory landscape.
Watch the episode on YouTube below with highlights and key quotes to follow.
Maryland Case: Judicial Estoppel Takes Center Stage
The Maryland case against Kalshi, a prominent prediction market platform, has reached a critical juncture. The presiding judge paused proceedings to request supplemental briefs, focusing on whether Kalshi’s prior statements in a separate lawsuit against the CFTC (Commodity Futures Trading Commission) should prevent it from taking a contradictory stance now—a legal principle known as judicial estoppel.
Wallach explained, “The judge highlighted several of those prior statements and suggested, if it’s not a judicial estoppel, enlighten me as to how it could impact my decision on Kalshi’s motion for preliminary injunction.”
Wallach described this as “a very important inflection point in the litigation because now, for the first time, the judge is focusing on what Kalshi said in an earlier lawsuit.”
The crux of the issue lies in Kalshi’s previous argument that the Dodd-Frank Act’s “gaming” category should be narrowly interpreted to cover only sports betting, not political event contracts. Now, Kalshi is taking a broader view, arguing that sports contracts should be permitted on derivatives markets—an apparent reversal.
“When it suited Kalshi, it took the position that sports contracts weren’t swaps, and in this case, they’re taking the opposite position that sports betting is in fact a swap that’s covered under the exclusive jurisdiction of the CFTC,” Wallach noted.
The judge has set a supplemental briefing deadline of June 13, with replies due June 25, and is expected to rule by mid-July.
Nevada update: A legal win for Kalshi
In Nevada, Kalshi scored a significant victory when the court denied the defendants’ motion to dismiss, reinforcing the earlier grant of a preliminary injunction. Wallach likened the Nevada judge’s approach to being “the George Washington of the analysis of these legal issues,” noting that Judge Gordon sided with Kalshi’s argument that the CFTC has exclusive jurisdiction over swaps and excluded commodities, leaving no room for state regulation.
This decision was not appealed, which Wallach suggested may have been a strategic misstep by the state attorney general’s office. “It was his decision that really created the forward momentum for Kalshi,” Wallach observed.
New Jersey appeal and upcoming Quintenz confirmation hearing
The New Jersey case is currently on appeal in the Third Circuit, adding another layer of complexity to the evolving legal landscape. Meanwhile, attention is turning to Brian Quintenz’s upcoming Congressional confirmation hearing on June 10, which could have implications for the future direction of prediction market regulation.
Quintenz, a former CFTC commissioner and former Kalshi board member, has a history of involvement with derivatives and prediction markets. He also recently announced his intention to divest his current stock and stock options in Kalshi within 90 days following his confirmation.
As President Trump’s appointee for CFTC Chairman, Wallach predicts “he’s going to be confirmed.” So the only questions remaining are exactly what Congressional members will ask Quintenz during his hearing, including where Quintenz stands on sports prediction markets and the role of the CFTC, Congress, and the states in overseeing them.
Looking ahead: The future of sports event contracts
Wallach summarized the current state of play: “We’re in sudden death overtime in the federal courts.” The Maryland case, in particular, is being closely watched for its potential to set new legal precedents around judicial estoppel and the boundaries of federal versus state regulatory authority.
As the legal battles continue, the prediction market industry—and its regulators—will be watching for the courts’ next moves, which could shape the future of event-based derivatives trading in the U.S.
