Key Moments:
- A Montana federal judge has declined a third bid to pause proceedings between Kalshi and state officials.
- Kalshi’s motion for a preliminary injunction, pending since April, has been denied for lack of demonstrated irreparable harm.
- The stay is now lifted and the state must answer Kalshi’s complaint within 21 days.
Procedural Pause Brought to an End
A federal court in Montana has decided against ongoing procedural delays in the lawsuit brought by Kalshi against state authorities. On August 27, Judge Donald Molloy rejected a third joint motion from both parties seeking to extend the stay, concluding that neither side provided sufficient justification for further postponement.
Background of the Dispute
Kalshi initiated legal action in April, naming Attorney General Austin Knudsen and others as defendants. The company accused Montana of interfering with what it described as the federal government’s exclusive role in regulating derivatives trading on exchanges overseen by the Commodity Futures Trading Commission. This lawsuit followed a cease-and-desist notice from the state’s Gambling Control Division, which had claimed Kalshi’s operations fell under the category of illegal gambling according to Montana law.
Efforts to Stay Proceedings and Court’s Reasoning
After Kalshi requested declaratory relief and sought injunctions to prevent enforcement, the case was repeatedly put on hold as both parties agreed to stays, which were twice extended with status updates required in June and August. On August 21, the parties submitted another request to extend the pause, but did not provide a substantive reason, arguing only that “a further continuation of the stay is appropriate.” Judge Molloy pointed out that federal rules require a motion to clearly state the reasons supporting the request. Because no specifics were included, the court found insufficient cause to grant further delay.
Denial of Preliminary Injunction
Kalshi’s motion for a preliminary injunction, filed on April 21, was also denied. The court explained that to grant such an injunction, Kalshi needed to show a likelihood of success on the merits, the risk of irreparable harm without relief, that the balance of equities weighed in its favor, and that the injunction would be in the public interest. Judge Molloy highlighted the importance of the first factor in constitutional disputes but further emphasized that the absence of any single element would undermine the request.
Kalshi’s argument for urgent relief was weakened by its repeated agreements to stay the litigation for several months. Citing Supreme Court precedent, Judge Molloy wrote:
“Issuing a preliminary injunction based only on a possibility of irreparable harm is inconsistent with our characterization of injunctive relief as an extraordinary remedy.”
Accordingly, the motion was denied without prejudice, meaning Kalshi could submit another request in the future if circumstances change.
Next Steps in Litigation
With the stay lifted, the state is now required to formally respond to Kalshi’s complaint within 21 days, and the case is set to advance without further agreed-upon delays.
| Event | Date | Outcome |
|---|---|---|
| Kalshi files lawsuit and moves for preliminary injunction | April 21 | Motion pending |
| Third motion to stay proceedings filed | August 21 | Denied by court |
| Stay lifted, state required to respond | August 27 | Proceedings move forward |
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