A federal judge granted Utah summary judgment Tuesday, holding that the Commodity Exchange Act does not preempt the state’s anti-gambling laws as applied to Kalshi’s sports event contracts. The exchange says it will appeal to the Tenth Circuit, which would bring prediction-market appeals into seven of the 13 federal circuits.
Key Takeaways
Judge Shelby granted Utah summary judgment and denied Kalshi’s preliminary injunction.Online gambling in Utah is a third-degree felony under the state’s constitutional ban.New York cited the ruling as supplemental authority within a day of its release.U.S. District Judge Robert J. Shelby ruled Tuesday that the Commodity Exchange Act does not shield Kalshi from Utah’s anti-gambling laws, granting the state summary judgment and denying the exchange’s motion for a preliminary injunction. “The court concludes the federal law relied upon by Kalshi does not preempt Utah’s ability to enforce its anti-gambling laws,” Shelby wrote.
Utah is an unusually hostile venue for the argument. The state constitution bans gambling outright, and offering online betting there is a third-degree felony. A new state law adding proposition bets to the statutory definition of gambling prompted Kalshi to sue in February, after Gov. Spencer Cox publicly attacked prediction markets and the company grew concerned that Utah intended to bring a criminal enforcement action.
Kalshi spokesperson Jacki McGavick said the company disagrees with the decision and that it will not be the final word in Utah. Sports event contracts remain available to Utah users for now, with no enforcement action filed.
New York’s attorney general submitted Shelby’s decision as supplemental authority within a day, using it to oppose the CFTC’s motion for a preliminary injunction against the state after it sued Kalshi as an unlicensed gambling operation last week.
