# Fourth Circuit Kalshi v. Martin Preemption Case

**Case:** KalshiEX LLC v. Martin, No. 25-1892 (4th Cir.)
**Status:** Oral argument completed May 7, 2026; ruling pending (expected July-September 2026)
**Kalshi counsel:** Neal Katyal

## Background

Maryland district court denied Kalshi preliminary injunction in August 2025, finding:
- 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 Arguments

**Core thesis:** "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

CFTC filed on its own behalf with significant scope expansion:
- "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.

## Circuit Split Context

- **Third Circuit** (April 6, 2026): Pro-CFTC preemption (for DCMs)
- **Fourth Circuit**: Oral argument May 7, 2026 — 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

If Fourth Circuit rules pro-state, circuit split becomes 2-1, significantly increasing SCOTUS cert probability above current 64% (Polymarket).

## Governance Market Gap

No party brief, amicus brief, academic filing, or practitioner preview mentions governance markets, decision markets, futarchy, or endogenous settlement mechanisms. This is the 38th consecutive session with this finding.

## Timeline

- **2025-08** — Maryland district court denies Kalshi preliminary injunction
- **2026-05-07** — Fourth Circuit oral argument (Neal Katyal for Kalshi)
- **2026-07 to 2026-09** — Expected ruling window

## Sources

- MCAI Lex Vision Fourth Circuit preview
- Bettors Insider analysis
- Jones Walker legal analysis
- National Law Review coverage