A federal judge in Utah has ruled that the state’s anti-gambling laws apply to Kalshi’s sports event contracts, rejecting the company’s argument that federal commodities law preempts state enforcement and granting Utah summary judgment in the lawsuit.
U.S. District Judge Robert J. Shelby concluded Tuesday that the Commodity Exchange Act does not prevent Utah from enforcing its gambling laws against Kalshi’s sports-related event contracts, even though the company operates as a federally registered exchange overseen by the Commodity Futures Trading Commission.
The ruling closes the case and marks the first final federal judgment in the country rejecting Kalshi’s preemption argument.
Judge rules against Kalshi
In his opinion, Shelby wrote that “the court concludes the federal law relied upon by Kalshi does not preempt Utah’s ability to enforce its anti-gambling laws,” and that it would be “inconsistent for Congress to allow States to regulate their gambling laws but to simultaneously require States to provide citizens access to every event contract, including those that constitute gambling under State law.”
The judge also said stated gambling laws do not “prevent the CFTC from serving the public interest in regulating derivatives markets,” and that Kalshi did not convince the court otherwise.
He granted summary judgment for Utah and ordered the case closed.
Utah response to ruling
Utah Atty. Gen. Derek Brown hailed the ruling. Utah’s laws make offering online gambling a third-degree felony.
“You can’t rebrand illegal gambling as a federal commodity, and today a federal judge agreed with us,” Brown said in a release. “Kalshi bet that clever branding would beat Utah law. Kalshi lost and Utah won.
“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.”
The American Gaming Association also celebrated the ruling Wednesday.
“A Utah judge’s final decision reaffirms that the authority to regulate gambling rests with the state,” an AGA spokesperson said in a statement. “We agree with Attorney General Brown and 43 other state attorneys general that sports gambling is sports gambling – the so-called ‘prediction markets’ can’t rebrand it and offer it outside the law. The AGA applauds Governor Cox and Attorney General Brown for upholding Utah’s laws and protecting its residents.”
Kalshi’s response
Kalshi disagrees with the decision and will appeal, noting that “multiple courts have already recognized that prediction markets fall under exclusive federal jurisdiction, and we will continue to defend that position.”
The company has argued that its status as a CFTC-regulated designated contract market should shield it from state gambling enforcement.
Broader legal battles for Kalshi
The Utah ruling is the latest in a series of prediction market legal fights that have produced conflicting results across the country.
In New York, a federal judge recently denied Kalshi’s request for a preliminary injunction that would have blocked the state from enforcing its gambling laws against the company’s sports event contracts. The judge ruled that the CEA does not supersede New York’s gambling laws as applied to Kalshi’s sports contracts.
A federal judge in Minnesota blocked the state’s first-in-the-nation ban on prediction markets, finding that the CFTC, Kalshi and Polymarket had met their burden to show federal law likely preempts the state ban.
A state judge in Nevada extended a temporary ban on Kalshi’s sports-related contracts, ruling the products were “indistinguishable” from gambling and prohibited for any non-licensee to engage in. And in New Jersey, the 3rd Circuit ruled in April that state regulators cannot prevent Kalshi from offering sports event contracts, holding they are CFTC-regulated swaps subject to exclusive federal jurisdiction.
Why it matters
The Utah decision is the first final federal judgment rejecting Kalshi’s preemption argument, and it reinforces the view that states can enforce their anti-gambling laws against prediction markets even if they are federally registered.
It also adds to the growing split among courts and states over whether prediction markets are federally preempted swaps or gambling products subject to state law.
For Kalshi, the ruling means it faces enforcement in Utah and must navigate a patchwork of state regulations as the legal fight continues.
