Is Kalshi legal in Montana?

Montana's Gambling Control Division, part of the state Department of Justice, sent KalshiEX LLC an order to cease and desist dated March 26, 2025. It says the Division investigated Kalshi's activities in the state and "concludes that those activities constitute illegal gambling within the meaning of Montana law" (p.1). The reasoning has two parts. Montana bars public gambling unless a statute authorizes it (MCA § 23-5-157), and the letter says Kalshi's event contracts meet the state's definition because participants risk money for a gain contingent on chance, while Kalshi holds no Montana gambling license (pp.1-2). It also says contracts on sporting events are "sports wagering" under MCA § 23-7-103, which Montana permits only for an operator it licenses, and "Kalshi does not hold a Montana sports wagering license" (p.2). Signed by the Division's chief legal counsel, Jeremy S. Craft, it warns that refusal "will result in legal action against KalshiEX, LLC" (p.2).

According to emails Kalshi later filed in court, its lawyers met the Division on April 11, 2025, and on April 16 Craft wrote "We concur with your understanding" of their summary: Montana would defer enforcement until Kalshi's Nevada case before Chief Judge Gordon and any Ninth Circuit appeal ended, then give reasonable notice, and would not withdraw the letter. He added that Kalshi's 20-day deadline to request an administrative hearing was tolled for the same period (complaint Ex. 2, Doc. 1-2, pp.3-4).

On April 6, 2026 the Division sent a second letter in nearly the same words. It says the earlier agreement rested on a preliminary injunction in Kalshi's Nevada case, that the injunction "has since been dissolved", and that "the GCD again calls upon Kalshi to cease and desist its illegal activities within the State of Montana" (Doc. 1-3, p.2). Kalshi's lawyers answered on April 12 that they were "surprised by your characterization of the prior agreement", which in their reading ran through the Ninth Circuit appeal (Doc. 1-2, p.2). Those are each side's readings; we found no ruling on what the 2025 agreement meant.

Kalshi sued on April 12, 2026 in federal court in Helena: KalshiEX v. Knudsen, No. 6:26-cv-00028. The defendants were Attorney General Austin Knudsen, Division administrator Alex Sterhan, the Division, and five members of the Montana Lottery and Sports Wagering Commission. The complaint asks for a declaration that Montana's gambling statutes violate the Supremacy Clause "as applied to Plaintiff and its affiliates", and for a preliminary and permanent injunction against enforcing them (p.42). Those are Kalshi's claims.

The case then mostly waited. Kalshi moved for a preliminary injunction on April 21, and the same day both sides asked to stay the deadlines; stays followed on April 22 and June 22 (order, p.1). When they asked for a third on August 21 without giving a reason, Judge Donald W. Molloy refused on August 27, lifted the stay, and gave the state 21 days to answer, with no extensions. He also denied Kalshi's motion without prejudice: "Kalshi's repeated agreement to stay this matter for months at a time fatally undermines its ability" to show likely irreparable harm (p.3). The order does not decide whether federal law overrides Montana's gambling laws.

On September 17 the two sides filed a joint stipulation of dismissal. In it the defendants "will not commence, pursue, or refer for prosecution any civil or criminal enforcement action, investigation, cease-and-desist proceeding, or other administrative action against Kalshi" under Montana law over its role in event contracts traded on a designated contract market, until the later of Kalshi's request for further review being denied or an en banc decision (p.3, ¶1). After that, the attorney general, Sterhan and the Division must give Kalshi 30 days' written notice before acting (¶2). In return Kalshi dismissed the case with prejudice as to the five commission members, whom the stipulation describes as able only to report violations to others (p.2), and without prejudice as to the other three (¶3).

Judge Molloy's order of dismissal, dated September 21, dismisses the case on those terms, each party to pay its own costs, and declares all pending motions moot (p.1). It recites that the parties filed a stipulation; the promise not to enforce appears in the stipulation, not in the order.

Nothing we read addresses withdrawals, deposits or open positions for Montana customers: not the two letters, not the court's orders, not the stipulation. Each letter asks Kalshi to stop offering what the Division calls illegal gambling and says nothing about funds already on the platform. Kalshi's complaint argues that cutting off Montana residents, "including residents with ongoing investments", would strain federal rules for exchanges (p.41). That is Kalshi's argument, and no court has ordered anything about Montana accounts.

The pause is tied to a case Montana is not part of: KalshiEX v. Assad (No. 25-7516), Kalshi's challenge to Nevada's regulators, the same Nevada case the 2025 emails named. On August 28, 2026 a Ninth Circuit panel affirmed in part the order dissolving the preliminary injunction that had kept Nevada from enforcing its laws against Kalshi's sports-related contracts, and sent Nevada's challenge to its election contracts back to the district court (opinion, pp.4-5). Kalshi petitioned for rehearing en banc on September 9 (stipulation, p.3). On September 25 it asked the court to grant the petition or hold it until the CFTC revises its event-contract rule, 17 C.F.R. § 40.11. Nevada answered on October 1 that "Neither is warranted" and that revising the rule "would not change the outcome here". As of November 12, 2026, we could not confirm whether the court has ruled on the petition; our docket source could not be read for this case, and it lags the court's own system.

Montana's position, in its letters, is that Kalshi's contracts are unlicensed gambling under state law. Kalshi's position, in its complaint, is that the Commodity Exchange Act gives the CFTC "exclusive jurisdiction" over trading on designated exchanges such as its own and preempts Montana's laws (¶¶1, 9). The federal appeals courts that have ruled on that question disagree, and it is open. Realize’s Supreme Court tracker follows the petitions asking the Court to take it up, the Kalshi gambling guide sets out both sides, and Nevada's side of the case is on is Kalshi legal in Nevada?.

We found no Montana letter, order or suit aimed at a broker that offers Kalshi's contracts, such as Robinhood, Coinbase or Webull; we searched the Kalshi case record and news coverage, not every state agency's files. The stipulation's promise covers Kalshi, "its affiliates, or their respective officers, directors, employees, agents, or members" (p.3), and names no broker. Every other state's status is on the Kalshi legal page.

The letters, the suit and the stipulation are about whether Montana may treat Kalshi's contracts as unlicensed gambling, and a state gambling dispute is not a ruling on federal income tax. With no IRS guidance on event contracts, the three most common ways people we've seen file are capital gains on Form 8949, Section 1256 on Form 6781 and gambling income, and how to file Kalshi taxes shows how Realize rebuilds a Kalshi year under each.