Kalshi filed a complaint on 23 February in the US District Court for the District of Utah, seeking declaratory and injunctive relief primarily against government officials.
The company alleges that state representatives, including Utah Gov. Spencer J. Cox and Attorney General Derek Brown, are attempting to block its federally regulated event contracts. The filing asserts that Utah’s threatened enforcement of its anti-gambling laws is preempted by federal commodities law.
Citing the Commodity Exchange Act, Kalshi states that the Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over derivatives traded on designated contract markets. The CFTC concurs, although that assertion is still being tested in several court cases.
The dispute follows a series of public statements by Utah officials and a bill to ban prop bets. Utah House Bill 243 amends the state’s criminal code to explicitly classify prop bets as illegal gambling.
It defines these as wagers on individual statistics or occurrences during athletic events. The bill seemingly drops a wide net over how the state would classify these wagers, and sports prediction markets are included.
The complaint also references remarks by Gov. Cox asserting that businesses like Kalshi are illegal in Utah and indicating that multiple states may pursue action.
In addition, it cites an opinion article by Attorney General Brown stating that prediction markets operating in the state are unlawful and that he has a plan to address them.
Kalshi argues that these statements, combined with prior amicus briefs signed by Brown in federal appellate courts, demonstrate an imminent threat of enforcement.
Utah can’t regulate prediction markets, asserts Kalshi
The company states that it sought assurances of non-enforcement from the Utah Attorney General’s office but received no response.
It now seeks a temporary restraining order and preliminary injunction to prevent the state from initiating civil or criminal proceedings while the case is pending.
In its filing, Kalshi maintains that Congress granted the CFTC exclusive authority over futures and swaps markets to avoid fragmented state oversight.
It points to statutory language granting the agency exclusive jurisdiction over accounts, agreements and transactions involving swaps and commodity futures traded on approved exchanges.
The complaint asserts that allowing Utah to apply its gambling laws to federally authorised contracts would create a patchwork regime that Congress intended to prevent.
The company also notes that federal courts in Tennessee and New Jersey recently granted preliminary injunctions preventing state officials from taking similar action against its event contracts.
In those rulings, courts found that Kalshi was likely to succeed on the merits of its preemption claims and that it faced irreparable harm absent relief.
Utah law criminalises certain forms of gambling promotion but exempts lawful business transactions. Kalshi contends that trades executed on a CFTC-registered exchange fall within that exemption.
It seeks a declaration that Utah’s gambling statutes are unconstitutional as applied to its operations and an order barring enforcement against its exchange in the state.