Montana court rejects Kalshi bid to block state betting law

Montana federal court denies Kalshi injunction as state enforcement holds

In a Helena courtroom, a federal judge declined to halt Montana's enforcement action against Kalshi, refusing the company's motion for a preliminary injunction and leaving state regulators free to proceed while the underlying case is resolved on the merits.

The ruling in Montana arrived alongside the Ninth Circuit's determination that Kalshi's sports event contracts do not qualify as CFTC-regulated swaps — a classification that had been the load-bearing wall of Kalshi's federal preemption argument. If the contracts are not swaps under the Commodity Exchange Act, the preemption claim built on swap regulation does not reach them. That is not a procedural setback. It is a structural one.

Kalshi's position across its state litigation has rested on a single federal theory: that CFTC designation as a designated contract market places its contracts beyond the reach of state gaming and licensing law. The Ninth Circuit's swap classification ruling does not eliminate that theory entirely, but it removes one of its cleaner statutory anchors. The argument now has to work harder to explain why the Commodity Exchange Act's preemptive force extends to contracts the Ninth Circuit has just said fall outside the Act's swap framework.

The preliminary injunction standard requires a movant to show likelihood of success on the merits, irreparable harm, balance of equities, and public interest. The Montana court's denial means the judge found Kalshi had not cleared that bar — most likely on the merits prong, given how recently the Ninth Circuit spoke. A court asked to freeze state enforcement based on a federal preemption theory has less reason to do so the week after an appellate panel rejected a central piece of that theory in the same circuit.

What I keep coming back to is how the injunction calculus changes once a circuit rules against you on the underlying legal architecture. I have watched preemption arguments that looked strong in district court lose their traction the moment an appellate decision gave the lower courts permission to be skeptical. The Montana denial reads like exactly that.

The Supreme Court's involvement, reported separately, may ultimately resolve the circuit questions. But that resolution, if it comes, comes later. In the interval, state enforcement proceeds. Montana proceeds. Connecticut has its own action pending. The daily fines in Nevada remain in place. Each week the preliminary injunction strategy fails is a week state regulators build a factual record that a reviewing court will eventually have to confront.