A federal court has ruled that Utah can enforce its anti-gambling laws against Kalshi’s sports event contracts, rejecting the prediction market operator’s argument that federal commodities regulation shields it from state oversight.
US District Judge Robert J. Shelby granted summary judgement to Utah on 4 August, denied Kalshi’s request to block enforcement and directed the court clerk to close the case. Kalshi has confirmed that it intends to appeal the decision.
The court found that the Commodity Exchange Act does not prevent Utah from applying its gambling laws to Kalshi.
Utah received summary judgement, meaning the dispute was decided on its legal merits rather than through a temporary injunction ruling.
The judge rejected Kalshi’s claims of both express and implied federal pre-emption.
The court was not persuaded that state-specific restrictions would conflict with federal impartial-access requirements.
Utah has not yet detailed the exact enforcement measures it will pursue.
Kalshi said it disagrees with the judgement and will appeal.
Kalshi filed its lawsuit against Utah in February, seeking a declaration that the state could not enforce its gambling restrictions against a federally registered designated contract market.
The company argued that the Commodity Futures Trading Commission holds exclusive jurisdiction over swaps traded on designated contract markets under the Commodity Exchange Act. Kalshi maintained that applying Utah gambling law would interfere with the uniform federal system governing its event contracts.
However, the court’s 25-page decision found that Kalshi interpreted the CFTC’s exclusive jurisdiction too broadly.
Judge Shelby pointed to language stating that the CFTC’s authority does not supersede or limit jurisdiction held by federal or state courts. He also found that other provisions of the Commodity Exchange Act preserve a role for state gambling laws outside certain specifically defined exceptions.
The court therefore rejected Kalshi’s express pre-emption argument and found no indication that Congress intended federal commodities law to remove states’ longstanding authority over gambling.
The court also rejected Kalshi’s implied pre-emption claim, under which the company argued that complying with different state rules would conflict with the operation and purpose of federal law.
Judge Shelby found that enforcing Utah’s gambling restrictions would not prevent the CFTC from regulating derivatives markets, protecting market integrity or overseeing federally registered exchanges.
The decision said Congress was aware that gambling laws vary between states and had not established that every state must permit access to all federally listed event contracts. The ruling concluded that federal derivatives oversight and state gambling enforcement could therefore operate alongside one another.
The case follows Utah’s move to prohibit proposition betting and tighten its gambling laws. State law now includes bets on individual sporting actions, statistics, occurrences and non-occurrences within its definition of gambling.
One significant part of the judgement concerned Kalshi’s argument that state restrictions would conflict with federal rules requiring designated contract markets to provide impartial access.
Kalshi said allowing individual states to restrict contracts could create a fragmented regulatory system and make it difficult to operate a nationwide market.
The court was not persuaded that impartial access requirements were intended to prevent location-based restrictions. It found that the rules were primarily designed to stop financial discrimination between eligible market participants, including unequal fees or membership standards based on wealth.
Judge Shelby also noted that Kalshi’s contracts already prohibit certain groups from participating in particular markets, including athletes, coaches, officials and others connected to sporting events.
The court said Kalshi had not demonstrated why adding another category of restricted participants would make compliance with federal and state requirements impossible. The reasoning weakens the broader argument that state-specific controls are inherently incompatible with operating a federally regulated prediction market.
Utah Attorney General Derek Brown said the ruling confirmed the state’s authority to enforce its constitutional prohibition on gambling.
In the Attorney General’s official statement, Brown said:
Gambling is gambling no matter what any company calls it.
Kalshi spokesperson Jacki McGavick responded:
We disagree with today’s decision and will appeal.
Kalshi maintains that prediction markets fall under exclusive federal jurisdiction and has pointed to decisions from other courts that have supported its position.
Utah officials are now reviewing their enforcement options. The judgement allows the state to proceed under its gambling laws, although the ruling does not prescribe a particular technical or regulatory response.
The Utah judgement adds to a divided legal picture across the United States.
Courts in Maryland, Nevada, Ohio, New York and Wisconsin have issued decisions supporting state authority in disputes involving Kalshi. Decisions in New Jersey, Tennessee, Arizona and Minnesota have been more favourable to the company’s federal-jurisdiction argument.
That division reflects the wider disagreement between the CFTC and state authorities over whether sports event contracts should be treated primarily as federally regulated financial instruments or as products subject to state gambling laws.
A coalition of 41 state attorneys general has urged the CFTC to recognise state authority over sports-related prediction markets. The CFTC, meanwhile, has intervened in cases, including the Arizona dispute over Kalshi’s prediction market contracts, to defend its claim to federal oversight.
The Utah ruling does not resolve that national dispute. As a federal district court judgement, it applies directly to the case before Judge Shelby and may still be reviewed on appeal.
However, the decision gives states a detailed legal basis for arguing that CFTC registration does not automatically displace their gambling laws. Further appellate rulings will be central to determining whether prediction markets can operate under one national framework or must account for different rules across individual states.
