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Being fought in court

Is Kalshi legal in Maryland?

Kalshi got a state cease-and-desist letter in April 2025, lost a bid for a preliminary injunction in August 2025, and is appealing to the Fourth Circuit; Baltimore also sued it in August 2026.

Checked Oct 27, 2026 against court dockets and official pages. Not legal advice.

Kalshi in Maryland

Status
Being fought in court
Latest step in Maryland
Aug 13, 2026
State income tax
2% to 6.5%
Gambling losses
Only if you itemize

Legal status

Where does Kalshi stand in Maryland?

As of October 27, 2026, no court order stops prediction market trading in Maryland. The state's gaming commission sent Kalshi a cease-and-desist letter in 2025 and a federal judge refused to block the state, but the Fourth Circuit appeals court, which heard Kalshi's appeal on May 7, 2026, hasn't ruled. The city of Baltimore also sued Kalshi and Polymarket US in August 2026.

What happens next: The Fourth Circuit's ruling in KalshiEX v. Martin (No. 25-1892) is pending; the court hasn't set a date.

Kalshi · 5 steps

What has happened with Kalshi in Maryland?

Oldest first. Each links to the filing or page it comes from.
  1. Apr 7, 2025

    Regulator · Maryland Lottery and Gaming Control Commission · KalshiEX LLC v. Martin (No. 1:25-cv-01283)

    The commission sent Kalshi a cease-and-desist letter telling it to stop offering sports event contracts to Maryland residents. A letter is a demand, not a court order.

    D. Md. opinion, Aug. 1, 2025 (describes the letter)
  2. Apr 21, 2025

    Court · U.S. District Court for the District of Maryland · KalshiEX LLC v. Martin (No. 1:25-cv-01283)

    Kalshi sued Maryland gaming officials in federal court in Baltimore, saying federal commodities law blocks the state from enforcing its gambling laws against it. A similar case was filed the same day for Crypto.com (North American Derivatives Exchange v. Martin, No. 1:25-cv-01285).

    CourtListener docket, Kalshiex v. Martin
  3. Aug 1, 2025

    Court · U.S. District Court for the District of Maryland · KalshiEX LLC v. Martin (No. 1:25-cv-01283)

    A federal judge in Baltimore denied Kalshi's request for a preliminary injunction, finding it had not shown federal law overrides Maryland's gambling laws. This is an early ruling, not a final judgment, and it did not itself order Kalshi to stop.

    D. Md. opinion, Aug. 1, 2025
  4. Aug 6, 2025

    Court · U.S. Court of Appeals for the Fourth Circuit · KalshiEX LLC v. Martin (No. 25-1892)

    Kalshi appealed the denial to the Fourth Circuit appeals court, which heard argument on May 7, 2026.

    CourtListener docket, KalshiEx LLC v. Martin (4th Cir.)
  5. Aug 13, 2026

    City · City of Baltimore · City of Baltimore v. KalshiEX LLC; City of Baltimore v. QCX LLC (Nos. 1:26-cv-03217, 1:26-cv-03252, 1:26-cv-03253 (D. Md., after removal))

    Baltimore's mayor and city council sued Kalshi and Polymarket in the city's circuit court, saying their sports contracts are unlicensed sports betting and break the city's consumer protection ordinance. The cases now appear in federal court in Maryland.

    Baltimore mayor's press release, Aug. 13, 2026

Your taxes

What does this mean for your Maryland taxes?

Maryland taxes gambling winnings and prediction market profits as income (2% to 6.5%). Gambling losses only reduce your state tax if you itemize, and only up to your winnings.

For 2025, Maryland state rates run from 2% to 6.5%. Single filers pay 4.75% from $3,001 to $100,000, 5% to 5.75% up to $500,000, 6.25% to $1 million, and 6.5% above $1 million. Joint filers pay 6.25% from $600,001 and 6.5% above $1.2 million.

Maryland allows gambling losses only if you itemize. Maryland itemized deductions start from federal Schedule A, line 17, so a federal gambling loss deduction carries over. From 2025, itemized deductions are reduced for filers with federal AGI over $200,000 ($100,000 if married filing separately).

Federal tax applies wherever you live. The IRS hasn’t said how event contracts are taxed, so traders use one of four methods: capital gains, Section 1256, ordinary income or gambling. Kalshi taxes, explained. All Maryland tax rules.

A court fight doesn’t change what you already owe. Positions you closed still count in the year they closed, so download your records now, whatever happens with access in your state.

Ask your AI

Ask your AI about Kalshi in Maryland

Answer a few questions and we write the prompt for ChatGPT, Claude, Perplexity or any AI. It carries the four tax methods, your state’s rule and links to the pages behind them, checked November 3, 2026. Or run your actual trades for exact figures, free.

Tax year
Up or down this year?
Open positions on December 31?
Add rough numbers (optional)

The AI can then work the methods out for your year. Round figures are enough.

Your prompt

2,448 characters

I trade prediction markets on Kalshi. I'm working on my US federal taxes for 2026. I live in Maryland.

From WagerMints, checked November 3, 2026:
- Kalshi's Documents page says it does not report profits and losses to the IRS.
- Forms it may send: 1099-INT for interest, 1099-MISC for credits and rewards, 1099-B or 1099-DA for crypto transfers.
- Its Profit and Loss statement uses first in, first out, is split by year and updates on the first morning of each month.
- Reward credits only appear in the activity export, not the trades export.
- The IRS has published no guidance on how event contracts are taxed.

Four ways traders report this:
1. Capital gains: Form 8949 and Schedule D, short- or long-term by holding period. Net losses offset up to $3,000 of other income a year, and the rest carries forward.
2. Section 1256: Form 6781, 60% long-term and 40% short-term however long I held. Positions open on December 31 count as sold at that day's value. Disputed: Camuso and Mukherjee (Tax Notes Federal, June 2026) conclude it isn't available, White & Case argues for it, and the CFTC's October 2026 proposal to call event contracts swaps cuts against it, because Section 1256 excludes swaps.
3. Ordinary income: net result on Schedule 1, line 8z.
4. Gambling: winnings on Schedule 1, line 8b. Losses only on Schedule A if I itemize, only up to winnings, and only 90% of them from 2026.

Maryland: Maryland taxes gambling winnings and prediction market profits as income (2% to 6.5%). Gambling losses only reduce your state tax if you itemize, and only up to your winnings.
Legal status there: As of October 27, 2026, no court order stops prediction market trading in Maryland.

Read these pages:
- https://wagermints.com/kalshi-taxes
- https://wagermints.com/blog/how-kalshi-calculates-profit-and-loss
- https://wagermints.com/blog/how-to-report-kalshi-polymarket-taxes
- https://wagermints.com/state-taxes/maryland
- https://wagermints.com/legal/kalshi/maryland

My question: How would my year come out under each of the four methods?

How to answer:
- Say which links you opened, and never describe one you didn't open. If one fails, use the facts above and say so.
- Mark each point [linked source], [general tax rule] or [unsettled].
- Put the methods side by side in one table for my year, and state any number you assume.
- Don't pick a method for me. End with questions for a CPA or enrolled agent, then anything you need from me.

WagerMints doesn’t see or store what you type here. The prompt goes to the AI you pick, under that company’s terms. Never add your Social Security number, API keys or wallet keys. AI answers can be wrong, so check them against the linked sources and a preparer.

Questions

Questions about Kalshi in Maryland

Is Kalshi legal in Maryland?

Kalshi got a state cease-and-desist letter in April 2025, lost a bid for a preliminary injunction in August 2025, and is appealing to the Fourth Circuit; Baltimore also sued it in August 2026. This reports public records as of Oct 27, 2026, and it isn't legal advice.

Can I still trade on Kalshi in Maryland?

Check the app, because platforms change what they offer by state and by contract type. This page tracks court and regulator actions, not each platform's product list.

Do I owe tax on Kalshi profit in Maryland?

Yes, federal tax applies wherever you live. Maryland taxes gambling winnings and prediction market profits as income (2% to 6.5%). Gambling losses only reduce your state tax if you itemize, and only up to your winnings.

Does the Maryland legal fight change how my trades are taxed?

No. These cases decide whether Maryland can license or stop the platforms. They don't decide how your trades are taxed. IRS Publication 525 says income from illegal activities must be reported too, so a state's win wouldn't remove tax on profit you already made.

More

Other pages on this

Other platforms in Maryland: Polymarket.

Kalshi in other states: Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, New Mexico, and the full list.