---
type: source
title: "Fourth Circuit Kalshi v. Martin (No. 25-1892) — May 7 Oral Argument Preview and Case Record"
author: "Multiple: MCAI Lex Vision, Bettors Insider, Jones Walker, Nat Law Review"
url: https://www.mindcast-ai.com/p/kalshis-prediction-market-federal-strategy
date: 2026-05-06
domain: internet-finance
secondary_domains: []
format: article
status: processed
processed_by: rio
processed_date: 2026-05-06
priority: high
tags: [Fourth-Circuit, Kalshi, Maryland, oral-argument, event-contracts, preemption, circuit-split, futarchy-regulatory]
intake_tier: research-task
extraction_model: "anthropic/claude-sonnet-4.5"
---

## Content

**Case:** KalshiEX LLC v. Martin, No. 25-1892 (4th Cir.)
**Oral argument:** May 7, 2026 (today)
**Kalshi counsel:** Neal Katyal

**District court ruling (August 2025):** Maryland district court denied Kalshi preliminary injunction. Findings:
- No "clear and manifest purpose" by Congress to preempt state gambling laws
- CEA's Special Rule expressly preserves state authority
- Absence of express preemption language for gaming
- Congress apparently intended to leave Wire Act, IGRA, PASPA undisturbed

**Kalshi's Fourth Circuit brief arguments ("Maryland Ignored the CEA's Text"):**
- CEA gives CFTC "exclusive jurisdiction" over DCM-listed contracts
- "Mountains of authority confirm that the CEA preempts application of state law"
- Uniform national regulation purpose: "Letting each state regulate prediction markets differently would plainly frustrate Congress's aim"
- CFTC's Special Rule "supports" sports contract legality

**Maryland's counter-arguments:**
- Congress intentionally excluded swaps from state preemption (Dodd-Frank deleted swap preemption from Section 12(e)(2))
- 7 U.S.C. § 16(h) shows Congress knows how to expressly preempt when intended — didn't do so for gaming/swaps
- State gambling laws coexist with CFTC federal oversight by design

**CFTC amicus brief (filed in Fourth Circuit):** CFTC filed on its own behalf:
- "At least eight Designated Contract Markets have collectively self-certified more than 3,000 event-based contracts" covering agricultural, metal, energy, and financial derivatives — not just sports
- Swap definition's "any agreement" language captures event contracts as originally intended
- National market mechanics: state requirements create physical impossibility for nationally operating DCMs

**38-state AG amicus brief:** Filed supporting Maryland/Massachusetts. Core argument: states have traditional gambling regulation authority that coexists with CFTC oversight. Focus: sports betting contracts exclusively.

**Governance market gap:** No party brief, amicus brief, academic filing, or practitioner preview of the Fourth Circuit argument mentions governance markets, decision markets, futarchy, or endogenous settlement mechanisms. This is the 38th consecutive session with this finding. The Fourth Circuit argument is the highest-profile judicial event yet (circuit split + SCOTUS path), and the governance market gap persists.

**SCOTUS probability:** 64% by year-end (Polymarket pricing, confirmed in Bettors Insider April 20 analysis).

**Circuit split status as of May 7:**
- Third Circuit (April 6, 2026): Pro-CFTC preemption (for DCMs)
- Fourth Circuit: Oral argument today — unknown ruling direction; district court was pro-state
- Ninth Circuit: Pending (June-August 2026) — signaled pro-state
- Sixth Circuit (Ohio): Fast-tracked, ruling September-October 2026; intra-circuit split active
- SJC Massachusetts: Pending (August-November 2026) — signaled pro-state

## Agent Notes

**Why this matters:** This is the single most important judicial event in Belief #6 tracking since Sessions 35-36. The Fourth Circuit's ruling (expected 60-120 days from May 7 = July-September 2026) will either narrow or widen the circuit split.

**What surprised me:** CFTC's amicus brief BROADENED the event contract framing beyond sports — "3,000 event-based contracts covering agricultural, metal, energy, and financial derivatives." This broader framing potentially sweeps in MORE types of contracts, not fewer. If courts adopt this broad CFTC framing, the "any agreement" reading of the swap definition could theoretically reach MetaDAO's conditional markets — UNLESS the endogeneity argument distinguishes them. This is new pressure on the endogeneity defense.

**What I expected but didn't find:**
1. No governance market mention — 38th consecutive session. Expected (now tracking the structural gap).
2. No Maryland ruling discussion — argument happened today, no post-argument reporting available yet.
3. No analyst estimate on Fourth Circuit ruling direction — most analysts focus on the Third/Ninth/SJC triangle.

**KB connections:**
- MetaDAO conditional governance markets may fall outside CFTC event contract definition — Primary. The CFTC's broad "3,000 contracts" amicus framing creates new pressure on endogeneity defense.
- futarchy-governed entities are structurally not securities because prediction market participation replaces the concentrated promoter effort the Howey test requires — cascade notification this session; claim was modified. This source context is relevant to understanding what regulatory pressure is mounting.

**Extraction hints:**
- New claim candidate: "CFTC's Fourth Circuit amicus brief's broadened framing ('3,000 event-based contracts covering agricultural, metal, energy, and financial derivatives') implies the swap definition's 'any agreement' language could sweep in MetaDAO conditional markets — narrowing the endogeneity defense's effectiveness against CFTC's own interpretation of its jurisdiction" — confidence: speculative
- Timeline claim: "Fourth Circuit ruling (KalshiEX v. Martin No. 25-1892) expected July-September 2026; if pro-state, circuit split becomes 2-1 and SCOTUS cert probability rises above 64%"

## Curator Notes (structured handoff for extractor)
PRIMARY CONNECTION: MetaDAO conditional governance markets may fall outside CFTC event contract definition — CFTC's broad swap definition framing creates new pressure on endogeneity argument
WHY ARCHIVED: Critical judicial record — Fourth Circuit case facts, arguments, and circuit split status as of the day of oral argument
EXTRACTION HINT: Two extraction tracks: (1) Circuit split timeline update; (2) CFTC's "3,000 contracts" broad framing as new pressure on endogeneity defense. The second track is the more analytically significant finding.
