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A federal judge in Utah allowed the state to enforce its antigambling laws against Kalshi, rejecting the company’s argument that a federal commodities law preempts state restrictions on prediction markets.
The decision marks a notable loss for prediction market firms and the Trump administration amid a legal battle with states over who has the authority to regulate the platforms.
U.S. District Judge Robert Shelby ruled Tuesday that the Commodities Exchange Act does not block Utah from enforcing its gambling restrictions against prediction markets, finding the law does not expressly or implicitly preempt state measures.
The Commodities Exchange Act, which was enacted in the 1930s, was updated after the 2008 financial crisis to give the Commodity Futures Trading Commission (CFTC) the ability to regulate financial instruments known as swaps.
Prediction markets, which allow users to place wagers on the outcome of various events, argue that transactions on their platforms fall under this category.
“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 Tuesday.
“Congress has attempted to support States in these efforts ‘since the early 19th century.’ It is simply implausible that Congress would silently reverse course though an Act addressing the 2008 housing financial crisis,” he added.
Utah Attorney General Derek Brown (R) touted the ruling, arguing that “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 in a statement. “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.”
Kalshi spokesperson Jacki McGavick said in a statement that the company disagrees with the decision and plans to appeal.
“Multiple courts have already recognized that prediction markets fall under exclusive federal jurisdiction, and we will continue to defend that position,” she added.
Utah is one of the few states that bans all forms of gambling. Kalshi sued Gov. Spencer Cox (R) and other state officials in February, seeking to block a potential enforcement action that it believed was imminent.
Just weeks earlier, CFTC Chair Michael Selig declared that his agency had exclusive jurisdiction over prediction markets and vowed to challenge any state regulations.
Cox immediately hit back at Selig, saying he would “use every resource within my disposal as governor of the sovereign state of Utah, and under the Constitution of the United States to beat you in court.”
“These prediction markets you are breathlessly defending are gambling—pure and simple. They are destroying the lives of families and countless Americans, especially young men. They have no place in Utah,” he wrote in a post on the social platform X.
English (US) ·