Kalshi and Montana Drop Lawsuits Over Prediction Markets

Jonathan Rodriguez

Written by: Jonathan Rodriguez

Last Update: Tue Sep 22, 2026, 7:47 am ET

Read Time: 3 minutes

Kalshi and Montana Drop Lawsuits Over Prediction Markets

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Kalshi and Montana agreed to dismiss their lawsuits on September 17, 2026, temporarily ending their legal fight over prediction markets. The agreement pauses Montana gambling enforcement while Kalshi pursues further federal appellate review.

The dispute centers on Kalshi's sports event contracts. Montana views these contracts as sports gambling, while Kalshi considers them financial derivatives regulated by the Commodity Futures Trading Commission (CFTC).

Under the filed joint stipulation, Kalshi drops its claims against Montana officials. Meanwhile, Montana agrees not to investigate or pursue enforcement involving Kalshi's event contracts during the standstill.

Judge Molloy Previously Rejected Kalshi's Injunction Request

The dismissal follows a significant ruling from U.S. District Judge Donald W. Molloy.

On August 27, Molloy denied Kalshi's request for a preliminary injunction against Montana officials. He also lifted the existing stay and ordered Montana to respond to Kalshi's complaint within 21 days. The judge specifically stated that no extensions would be granted.

Molloy found that Kalshi had not established the irreparable harm needed for preliminary relief. The order also noted that the parties had repeatedly agreed to delay the case.

The judge therefore denied Kalshi's preliminary-injunction request without prejudice. That meant Kalshi could potentially pursue the request again under different circumstances.

However, the case never reached that next stage. The parties instead reached their September agreement and dismissed the litigation.

Montana Keeps a Potential Enforcement Path

The dismissal does not permanently settle the dispute over Montana gambling regulations.

The Montana Lottery Commission defendants were dismissed with prejudice. Therefore, those particular claims cannot simply return to the same court.

Claims involving the Montana Department of Justice were dismissed without prejudice. Consequently, Montana retains a potential route to future enforcement litigation.

The agreement also requires Montana to provide Kalshi with 30 days' written notice before taking potential enforcement action after the standstill ends.

That distinction matters because the parties have linked the agreement to Kalshi's ongoing Ninth Circuit litigation.

Ninth Circuit Review Remains Important

Kalshi filed a petition for rehearing en banc on September 9. The petition followed the Ninth Circuit's August 28 ruling in the Nevada case involving the company's sports event contracts.

Under the Montana agreement, the state's enforcement pause lasts until the Ninth Circuit either denies further review or issues an en banc decision.

Therefore, Montana has not abandoned its underlying regulatory position. Instead, the state has agreed to wait while the federal appellate dispute develops.

The arrangement also gives Kalshi additional time to challenge the legal framework affecting its sports contracts.

Prediction Markets Face Wider State Challenges

The Montana case forms part of a broader dispute between prediction-market operators and state regulators.

Traditional US online sportsbooks operate under state licensing systems. Prediction-market platforms, however, argue that federally regulated event contracts fall under federal derivatives law.

That distinction has created conflicts as prediction markets expand into sports.

Missouri, for example, is preparing cease-and-desist action against prediction-market companies. Attorney General Catherine Hanaway has said sports event contracts constitute gambling under Missouri law.

Other states and tribal entities have also challenged prediction-market operations. Meanwhile, Kalshi continues to seek federal appellate review of decisions affecting its sports contracts.

For Montana, the latest agreement removes the immediate courtroom confrontation. Nevertheless, the state's ability to revisit enforcement remains tied to developments in federal court.

The September dismissal therefore represents a pause rather than a final resolution. The next major developments in the Ninth Circuit could determine whether Montana resumes its enforcement efforts against Kalshi.

Jonathan Rodriguez
Jonathan Rodriguez

Jonathan is an avid basketball fan, and is often looking forward to the next upcoming NBA season when not checking players' stats during games. He also likes to keep his ears on the ground for the latest rumblings in the online casino industry.

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