Federal Judge Rules Utah Gambling Laws Apply to Kalshi

In Utah, a federal judge has ruled that the state's sports betting laws apply to Kalshi, a leading prediction market, and rejected the company's claim that federal law preempts state enforcement. 

According to U.S. District Judge Robert J. Shelby, the Commodity Exchange Act won't prevent the state from enforcing gambling laws as they relate to sports-related contracts, regardless of Kalshi being registered with the Commodity Futures Trading Commission. 

Judge Shelby wrote in his judgment that "the court concludes the federal law relied upon by Kalshi does not preempt Utah’s ability to enforce its anti-gambling laws. Defendants are entitled to summary judgment on Kalshi’s claim. Kalshi’s motion for a preliminary injunction is denied."

Judge Rejects Kalshi's Federal Preemption Argument

The lawsuit dates back to February. According to the Office of Utah Attorney General Derek Brown, "Gambling, the court explained, is a field traditionally regulated by the states, and Congress has supported that state authority since the early 1800s. The court found it implausible Congress would have quietly reversed that position in a law written to address the 2008 financial crisis."

“You can’t rebrand illegal gambling as a federal commodity, and today a federal judge agreed with us. Kalshi bet that clever branding would beat Utah law. Kalshi lost and Utah won,” said Utah Attorney General Derek Brown. “Utah’s constitution bans gambling to protect Utah families, and my office will enforce that ban. Gambling is gambling no matter what any company calls it.”

In response, Kalshi spokeswoman Jacki McGavick said the company disagrees with the decision and will appeal. 

"Multiple courts have already recognized that prediction markets fall under exclusive federal jurisdiction, and we will continue to defend that position," McGavick told news outlet KSL.

Prediction Market Court Battles Continue Across States

A similar ruling was issued in New York, with U.S. District Judge Analisa Torres saying, "Kalshi has not, therefore, made a clear or substantial showing that it is likely to succeed on the merits."

At the same time, a federal judge blocked Minnesota's outright ban of prediction markets. Judge Katherine Menendez issued a 44-page ruling saying, among other things, “Kalshi and Polymarket US are designated contract markets, so the CFTC has exclusive jurisdiction to regulate transactions involving those `swaps.’”

The legal battle between prediction markets and states continues.