Utah May Enforce Anti-Gambling Laws Against Kalshi, Judge Rules

SALT LAKE CITY: A federal judge has ruled that Utah may enforce its anti-gambling laws against prediction market operator Kalshi. The decision exposes the platform to state enforcement and rejects its claim that federal commodities law overrides Utah’s restrictions.

U.S. District Judge Robert J. Shelby granted summary judgment to Utah and directed the court clerk to close the case. Kalshi said it disagrees with the ruling and plans to appeal.

Judge Rejects Kalshi’s Federal Preemption Claim

Kalshi filed the lawsuit in February against Gov. Spencer Cox, Attorney General Derek Brown and other state officials. The company argued that its status as a federally designated derivatives exchange placed its event contracts under the exclusive jurisdiction of the Commodity Futures Trading Commission.

Utah lawmakers subsequently enacted HB243, the state’s Gambling Revisions law, which added proposition betting to the legal definition of gambling. The measure covers wagers based on an individual action, statistic, occurrence or non-occurrence.

Kalshi maintained that applying the state prohibition to contracts offered on its federally regulated exchange would violate the U.S. Constitution’s Supremacy Clause. It sought declaratory and injunctive relief preventing Utah officials from taking action against the platform.

Shelby disagreed, finding that the Commodity Exchange Act does not expressly or implicitly prevent Utah from applying its gambling rules. He also rejected the argument that state enforcement would interfere with the CFTC’s wider responsibilities.

“State regulation of its gambling laws does not prevent the CFTC from serving the public interest in regulating derivatives markets, preventing price manipulation, ensuring financial integrity, protecting market participants, and promoting innovations,” Shelby wrote. “Kalshi has not met its burden of showing otherwise.”

Utah Officials Say State Ban Applies

The ruling allows Utah to enforce a prohibition that extends across casinos, lotteries, sportsbooks and other gambling products. State officials have consistently maintained that presenting event-based wagers as financial contracts does not exempt them from that ban.

“You can’t rebrand illegal gambling as a federal commodity”, Brown said following the ruling. “Utah’s constitution bans gambling to protect Utah families, and my office will enforce that ban.”

Cox also described prediction markets as gambling and said the decision affirmed the state’s authority to protect residents. Kalshi spokesperson Jacki McGavick responded that other courts have recognized exclusive federal jurisdiction over prediction markets and confirmed the company intends to appeal.

The ruling is a final district court decision rather than an interim refusal to grant emergency protection. Unless Kalshi secures a stay or obtains relief on appeal, Utah may apply its existing laws to the platform.

Ruling Deepens Nationwide Legal Divide

The Utah decision adds to a growing split among courts examining whether state gambling laws can reach event contracts traded on CFTC-regulated exchanges. Kalshi has obtained favorable decisions in some jurisdictions, while authorities in others have secured rulings allowing state restrictions to remain in force.

New York recently sued Kalshi over alleged unlicensed gambling, seeking an injunction, restitution and financial penalties. Courts in Washington and other states have also restricted some of the platform’s sports-related offerings.

The appeal will give a higher court another opportunity to address whether the Commodity Exchange Act displaces state gambling laws when applied to prediction markets. Until an appellate court intervenes, Shelby’s judgment leaves Utah free to pursue enforcement under its statewide gambling prohibition.

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