Federal Judge Rules Utah Can Enforce Anti-Gambling Laws Against Kalshi

^{Ads like this may soon be outlawed in Utah following a recent federal judge's ruling. (Photo: Richard Levine / Alamy)}

A federal judge ruled Tuesday that Utah has the right to enforce its anti-gambling laws against Kalshi, siding with the state in a lawsuit the prediction market filed to preempt such a move.

U.S. District Judge Robert Shelby found that the Commodities Exchange Act did not block the enforcement of Utah's state-level gambling laws, rejecting Kalshi’s argument that its contracts were only subject to regulation by the Commodity Futures Trading Commission (CFTC).

Judge Cites History of State-Level Gambling Control

In the ruling, Shelby wrote that the federal government has traditionally left gambling policy within the purview of individual states.

“The Supreme Court has stated that it is ‘quite sure the Government has a substantial interest in supporting the policy of [non-gambling] States, as well as not interfering with the policy of States that permit [gambling],” Shelby wrote. “Congress has attempted to support States in these efforts ‘since the early 19^th century.’ It is simply implausible that Congress would silently reverse course through an Act addressing the 2008 housing financial crisis.”

Kalshi and other prediction markets – as well as the CFTC itself – have pointed to updates to the Commodities Exchange Act that gave the CFTC regulatory authority over financial instruments such as swaps. The industry argues that its contracts are swaps and therefore federally regulated instruments.

But state-level officials and regulators have pushed back on this assertion. At issue is the broad range of contracts that prediction markets have offered in recent years, first pushing into election markets before also adding sporting event contracts. Those contracts – which critics say are little more than sports betting offerings by another name – now make up the majority of revenue for Kalshi, while state officials say the markets violate their gambling regulations.

“You can’t rebrand illegal gambling as a federal commodity, and today a federal judge agreed with us,” Utah Attorney General Derek Brown said in a statement. “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.”

Utah Considering Enforcement Options

Kalshi remains available in Utah at the moment. While Shelby granted summary judgment in favor of Utah and ordered the case closed, the ruling didn’t establish an injunction or otherwise impact Kalshi’s operations.

Instead, Utah officials will need to decide how they want to enforce the state’s gambling laws.

“At this point of the game, we’re simply looking at what our options are and I would say that everything’s on the table,” Attorney Brown told FOX 13 News.

Any action Utah takes will likely be challenged by Kalshi, which has already vowed to appeal Shelby’s ruling.

“We disagree with today’s decision and will appeal,” Kalshi said in a statement. “Multiple courts have already recognized that prediction markets fall under exclusive federal jurisdiction, and we will continue to defend that position.”

Legal battles between prediction markets and state governments continue to rage across the country. With both state and federal courts reaching different determinations on the sovereignty issues at the heart of the dispute, it appears all but certain that the Supreme Court will hear a case on the topic in the future.