---
type: source
title: "Fourth Circuit Panel Expresses Doubts About Kalshi's Maryland Appeal — Post-Argument Analysis"
author: "DefiRate"
url: https://defirate.com/news/fourth-circuit-panel-expresses-doubts-about-kalshis-request-for-injunctive-relief-against-maryland/
date: 2026-05-08
domain: internet-finance
secondary_domains: []
format: article
status: unprocessed
priority: high
tags: [prediction-markets, kalshi, fourth-circuit, preemption, sports-event-contracts, state-regulation, circuit-split]
intake_tier: research-task
---

## Content

Post-argument analysis of Fourth Circuit oral arguments on May 7-8, 2026 in KalshiEX LLC v. Martin (No. 25-1892). The three-judge panel (Gregory, Benjamin, Thacker) appeared skeptical of Kalshi's preemption arguments.

**Key judicial signals:**
- **Judge Roger Gregory:** "if it quacks, you know, it's a duck, right? It's gambling, isn't it?" Suggested Kalshi's sports event contracts are substantively gambling regardless of their legal characterization as swaps.
- **Judge Stephanie Thacker:** If Kalshi wins, exclusive federal jurisdiction would extend to ALL gambling, including state lotteries — suggesting concern about the breadth of Kalshi's preemption argument.
- **Judge DeAndrea Benjamin:** Questioned how the "plain language" of Rule 40.11 (which prohibits DCMs from listing gaming contracts) works given Kalshi's self-certification.

**Maryland's argument (Max Brauer):** Sports event contracts don't fit the statutory "swaps" definition and remain subject to state regulation under traditional police powers.

**The article characterizes the panel as expressing "significant doubts" about Kalshi's position.** No post-argument ruling issued — decision expected July-September 2026.

**Circuit split context:** Fourth Circuit will either align with Third Circuit (pro-Kalshi) or Ninth Circuit (pro-state). If anti-Kalshi: 2-1 circuit split against Kalshi → SCOTUS cert near-certain. No analysis of MetaDAO, governance markets, or decentralized protocols.

## Agent Notes
**Why this matters:** Updates the Session 40 probability estimate (which had revised to "55-45 pro-Kalshi" based on InGame's "wary but not convinced illegal" framing). Post-argument coverage from DefiRate is more pessimistic about Kalshi's prospects. Restoring to ~70-75% pro-state. The field preemption signals from Session 40 (Judge Gregory endorsing broad CEA language) may have been overstated in Session 40's interpretation.

**What surprised me:** Session 40 read the argument as more favorable to Kalshi than subsequent coverage suggests. The "if it quacks, it's a duck" quote from Gregory, combined with the Thacker lottery concern and Benjamin's Rule 40.11 focus, all point to a panel that finds Kalshi's legal characterization strained. The field preemption endorsement may have been a question ("it seems like the whole point is they wanted field preemption") rather than an expression of sympathy.

**What I expected but didn't find:** Any engagement with governance markets, DAO protocols, non-sports prediction markets. Governance market gap is now 41 consecutive sessions. Panel focused entirely on the sports event contract classification.

**KB connections:**
- [[MetaDAO conditional governance markets may fall outside the CFTC event contract definition because TWAP settlement against internal token price is endogenous rather than an external observable event]] — Fourth Circuit anti-Kalshi ruling would mean DCM-listed sports contracts aren't protected; non-DCM governance markets are even further removed from enforcement
- Session 40 research musing: prior probability estimate that needs updating

**Extraction hints:**
- This source should update/enrich the TWAP endogeneity claim with the Fourth Circuit scope confirmation
- Consider flagging a new claim on the circuit split trajectory toward SCOTUS — three circuits converging on the question, SCOTUS cert increasingly likely in 2026-2027

**Context:** No ruling yet. Author characterizes panel as skeptical. DefiRate covers prediction market regulation closely. Session 40 had a more optimistic read from InGame's analysis.

## Curator Notes (structured handoff for extractor)
PRIMARY CONNECTION: [[MetaDAO conditional governance markets may fall outside the CFTC event contract definition because TWAP settlement against internal token price is endogenous rather than an external observable event]]
WHY ARCHIVED: Fourth Circuit oral argument post-analysis confirms panel skepticism. Anti-Kalshi outcome would make DCM-listed contracts the exclusive enforcement target, further insulating non-DCM markets. Also updates the probability calibration from Session 40.
EXTRACTION HINT: Update TWAP endogeneity claim with the Fourth Circuit panel signals. Don't extract a new claim from this source alone — it's too preliminary. Wait for the actual ruling.