Inside Kalshi and Maryland's Fourth Circuit Showdown Over Sports Event Contracts

On September 9, 2026, two letters landed on the same Fourth Circuit clerk's desk, in the same case, addressing the same ruling. One came from Maryland's Attorney General's office. The other came from Kalshi's own counsel at Milbank. Both were writing about the Ninth Circuit's August 28 decision in KalshiEX, LLC v. Assad. Both claimed it helped their side.

The case is KalshiEX LLC v. Martin, No. 25-1892, pending before the Fourth Circuit, with Maryland's gaming regulator on the other side. Assad isn't binding on the Fourth Circuit, but both parties clearly think it is persuasive enough to fight over, which is exactly why each side rushed a letter to the clerk within hours of each other under Federal Rule of Appellate Procedure 28(j), the rule that lets litigants flag newly decided authority mid-appeal.

Maryland's Reading: Kalshi Lost, Full Stop

Maryland's letter, signed by Assistant Attorney General Erik Delfosse, treats Assad as a clean win. It notifies the court that the Ninth Circuit held the Commodity Exchange Act likely does not preempt Nevada's gaming laws as applied to Kalshi's sports event contracts, and points to two related unpublished rulings from the same day, North American Derivatives Exchange v. Nevada and Robinhood Derivatives v. Dreitzer, both of which followed Assad's reasoning.

Maryland's letter breaks the ruling into three findings. First, the Ninth Circuit held Kalshi's sports event contracts likely are not "swaps" under the statute at all. The panel noted that Congress talked about gambling repeatedly while writing Dodd-Frank but never wrote gambling into the actual text, and warned that reading "swap" broadly enough to cover sports bets would be the kind of interpretive overreach courts are supposed to avoid. The court also reasoned that Kalshi's contracts function like ordinary casino bets rather than the financial instruments the swap definition was built around, and that Kalshi's own reading of "swap" would put every one of these contracts in violation of the exchange-trading requirement that governs real swaps.

Second, Maryland's letter says the court found that CFTC Regulation 40.11 already prohibits Kalshi's gaming contracts, and that the rule this regulation is built on never gave the CFTC more authority to preempt gambling law than it has to preempt laws on terrorism or assassination, a comparison the panel apparently found useful for illustrating how narrow that authority actually is.

Third, even though the court read the statute's jurisdiction clause as an express preemption provision, it said that provision simply does not apply here, because these contracts are not swaps to begin with. The panel also rejected the idea that federal law occupies the whole field of gambling regulation, concluding that state sports wagering law and the CEA can operate side by side.

Put together, Maryland's letter tells the Fourth Circuit: the CEA does not preempt us, the contracts are not swaps, and our gaming rules are exactly what the Ninth Circuit says is allowed to apply.

Kalshi's Reading: You're Citing the Part We're Losing on Purpose

Kalshi's letter, from William Havemann at Milbank, tells an almost inverted story. It opens by pointing out that Assad actually rejected the exact argument the Maryland district court relied on below, that the CEA doesn't preempt state gambling law at all. According to Kalshi's letter, the Ninth Circuit held the opposite: that the statute's exclusive-jurisdiction language does expressly preempt state law, and that reading it any other way would make part of the statute's own saving clause pointless. Assad also declined to apply any presumption against preemption, focusing instead on the plain text.

So far, that sounds like a win for Kalshi. The letter then pivots to the part of Assad that actually hurt Kalshi: the conclusion that its sports contracts are not swaps in the first place, a question the Maryland district court never even reached. Kalshi's letter calls that conclusion mistaken, and spends most of its four bullet points explaining why.

Kalshi argues the Ninth Circuit's own opinion undercuts itself, since the panel acknowledged that CFTC's Special Rule already places gaming-related swaps under CFTC jurisdiction, and that one judge's concurrence noted the rule doesn't categorically bar all gaming contracts. Kalshi says that detail actually reinforces preemption rather than weakening it, since a regulation can only prohibit gaming contracts if the CFTC has jurisdiction over them to begin with, and points to the CFTC's own proposed rulemaking as evidence that sports-event contracts are meant to be permitted under the agency's authority.

The letter also goes after the court's textual reasoning directly, arguing that Assad wrongly required contracts to have "inherent" financial consequences to count as swaps when the statute only requires "potential" ones, and that the panel invented limits on the swap definition out of a fear the definition would otherwise sweep too broadly, when ordinary causation principles already keep it in check. Kalshi closes by arguing the panel got the history wrong too, citing a 1982 law review article to argue Congress always intended federal law to preempt state efforts to treat futures-style contracts as gambling.

Why Two Letters About the Same Case Matter

Neither letter is asking the Fourth Circuit to simply adopt Assad wholesale. Maryland wants the good parts adopted in full. Kalshi wants the preemption framework adopted and the "not a swap" conclusion rejected, which would flip the outcome even while accepting most of the Ninth Circuit's own logic. That is a narrower and, for Kalshi, more realistic ask than attacking Assad across the board, since conceding the preemption point costs Kalshi nothing if the Fourth Circuit ultimately agrees these contracts are swaps after all.

That makes the Fourth Circuit's eventual ruling in Martin one of the more important dates on the calendar for anyone watching this fight. If the Fourth Circuit adopts Maryland's reading in full, Assad's result spreads to a second circuit before Kalshi gets any appellate court to agree its sports contracts are swaps at all. If it adopts Kalshi's narrower ask instead, the country ends up with two circuits agreeing on the preemption theory and disagreeing on the one question that actually decides who wins.