A U.S. District Court judge in Utah has ruled that the Commodity Exchange Act (CEA) does not preempt the state’s anti-gambling laws, allowing Utah to enforce its gambling statutes against Kalshi’s sports prediction markets in a setback for the federally regulated operator.
Judge Robert J. Shelby denied Kalshi’s request for a preliminary injunction, granted summary judgment in favor of Utah officials, and directed the court clerk to close the case. The ruling rejected Kalshi’s argument that the Commodity Futures Trading Commission’s (CFTC) exclusive authority over federally regulated derivatives markets prevents states from regulating its event contracts under the U.S. Constitution’s Supremacy Clause.
Kalshi sued Utah in February, naming Governor Spencer Cox and Attorney General Derek Brown as defendants, arguing the state was preparing to block its federally regulated sports event contracts. The company maintained that Utah’s enforcement efforts would intrude on the federal government’s exclusive authority to regulate derivatives trading on CFTC-regulated exchanges.
Shelby ruled that the CEA neither expressly nor implicitly preempts Utah’s gambling laws, concluding that state gambling enforcement can coexist with federal commodities regulation. In the ruling, the judge said the CEA’s jurisdictional framework “strongly signals there is room for State regulation” alongside federal oversight.
The judge also rejected Kalshi’s claims of field and conflict preemption, finding that Utah’s gambling laws do not conflict with federal requirements governing designated contract markets. Kalshi had argued that Utah could force it to block state residents despite federal rules requiring impartial market access and that differing state gambling laws would undermine Congress’ goal of creating a uniform national derivatives market.
Utah strengthened its legal position in March by passing H.B. 243, which added prediction market proposition bets to the state’s legal definition of gambling. Under Utah law, offering online gambling is a third-degree felony.
The ruling noted that Kalshi’s sports contracts include markets tied to victory margins, losing streaks, player or team touchdowns and even the identity of the Super Bowl singer.
Utah Attorney General Derek Brown welcomed the decision: “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,” Brown added. “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.”
Governor Spencer Cox also praised the ruling: “Prediction markets are gambling, full stop. They are causing tremendous harm to countless American families.”
“Today’s ruling affirms that Utah’s anti-gambling laws are an appropriate way to protect our citizens and are not preempted by federal law,” Cox said, adding that he looked forward to continuing to work with Brown “to protect Utah families.”
Legal expert Daniel Wallach said Kalshi is expected to appeal the decision to the U.S. Court of Appeals for the Tenth Circuit, extending appellate litigation over sports prediction markets to seven of the 13 federal judicial circuits. He added that the Seventh and Eighth Circuits are also expected to become involved in similar appeals.
The decision has already been cited by the New York Attorney General’s Office as supplemental authority in its separate case against Kalshi and marks another legal setback for the company as multiple states continue to challenge whether its sports prediction markets constitute illegal gambling.