A federal judge has ruled that Utah may enforce its ban against Kalshi’s sports event contracts under its gambling laws.
The decision rejects Kalshi’s central claim that federal commodities law blocks state enforcement. US District Judge Robert J. Shelby granted Utah summary judgment on August 4, and ordered the case closed.
Kalshi filed the lawsuit in February, arguing that its federal registration placed its contracts beyond Utah’s gambling laws.
Shelby disagreed. The court found that Congress had not displaced the states’ longstanding authority over gambling, and that Kalshi’s status as an exchange regulated by the Commodity Futures Trading Commission (CFTC) did not immunize its sports markets from Utah law.
The ruling addresses the merits rather than merely deciding whether temporary protection was warranted. Utah can apply its statutes to contracts involving game winners, scoring margins, player performances and other sports outcomes.
Utah prohibits gambling under its constitution, and offering online gambling within the state can constitute a third-degree felony. Twenty-three federally recognized tribes and gaming associations supported Utah’s position during the litigation.
Utah Attorney General Derek Brown said in a statement: “You can’t rebrand illegal gambling as a federal commodity, and today a federal judge agreed with us. 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.”
States line up against prediction markets
The judgment follows a run of difficult decisions for Kalshi. A Washington judge granted a preliminary injunction in July after finding likely gambling and consumer-protection violations. The order restricted Kalshi’s operations while that case continued.
A federal judge in New York also denied Kalshi a preliminary injunction on July 7. The court found that the Commodity Exchange Act did not preempt New York’s gambling laws for sports event contracts, leaving state officials free to pursue enforcement.
Ohio secured another federal court victory in March. A judge found Kalshi’s sports contracts were not swaps protected by exclusive federal jurisdiction. The Ohio Casino Control Commission later imposed a $5m penalty tied to alleged illegal gambling activity.
Massachusetts won a preliminary injunction in January. That order required Kalshi to stop accepting sports trades from Massachusetts residents without complying with state gaming law.
The court record remains divided, however. The Third Circuit ruled for Kalshi in April, preserving an injunction against New Jersey enforcement. A Minnesota federal judge also paused that state’s prediction market ban in July.
Prediction market exchanges now face different rules depending on the court, state and procedural stage involved. Utah’s judgment carries added weight because it resolves the district court case on its merits.
The dispute also extends beyond Kalshi. Other federally regulated event contract exchanges rely on the same theory of CFTC exclusivity. Each state victory limits that argument’s practical reach, especially for products closely resembling conventional sports wagers.