Federal Judge Rules Utah Can Enforce Anti-Gambling Laws Against Kalshi

A federal judge dealt Kalshi a significant blow on Tuesday, ruling that Utah can enforce its anti-gambling laws against the prediction market platform’s sports betting contracts. U.S. District Judge Robert J. Shelby granted summary judgment in favor of the state, rejecting Kalshi’s argument that its status as a federally registered exchange shields it from state gambling regulation, and ordered the case closed.

The ruling is the latest twist in a sprawling legal fight that has pitted the New York-based prediction market against gaming regulators in more than a dozen states, with federal courts issuing conflicting decisions on whether Kalshi’s sports contracts amount to regulated derivatives or ordinary sports betting that falls under state control.

How the Case Unfolded

Kalshi sued Utah Governor Spencer Cox and Attorney General Derek Brown in February, seeking a declaration that Utah’s anti-gambling statutes are preempted by the Commodity Exchange Act (CEA) and asking the court to block any state enforcement action. The company operates as a Designated Contract Market registered with the Commodity Futures Trading Commission (CFTC), which oversees derivatives trading on things like crude oil, livestock, and precious metals. Kalshi argued that its “event contracts” on sports outcomes fall exclusively under that federal framework, putting them out of reach of state gambling law.

Utah, notably, is a total-ban state — its constitution prohibits all forms of gambling, and offering online betting there is a third-degree felony. Judge Shelby rejected Kalshi’s preemption theory outright, writing that “the court agrees that enforcement of state gambling laws is not inconsistent with the CFTC’s regulation and oversight of derivatives markets.” He noted that Congress has long been aware that some states permit gambling while others don’t, and that the CEA explicitly provides for state jurisdiction over the issue. The judge also pointed to the long history of state authority over gambling regulation dating back to the early 1800s.

Utah lawmakers weren’t waiting on the courts, either. The state legislature passed H.B. 243 in March, explicitly adding prediction-market proposition betting to the legal definition of gambling under Utah law — a move that further undercut Kalshi’s argument that its contracts existed in a regulatory gray area.

A Fractured Legal Landscape

Utah’s win adds to a genuinely split national picture. Kalshi has notched trial-court victories in Nevada, New Jersey, Tennessee, and elsewhere, and scored a landmark appellate win in April when a divided Third Circuit panel ruled 2-1 that the CEA preempts New Jersey’s gambling laws as applied to Kalshi’s sports contracts — the first federal appeals court to back the company’s position. But state regulators have also prevailed repeatedly, with courts in Maryland, Massachusetts, and Ohio siding against Kalshi, and a Nevada judge later reversing his own earlier ruling in the company’s favor.

Those conflicting outcomes are now working their way through the Third, Fourth, and Ninth Circuit Courts of Appeals, and legal observers widely expect the fight to eventually land at the Supreme Court given the direct circuit split on whether federal derivatives law can override a state’s constitutional authority to ban gambling outright.

Kalshi confirmed it plans to appeal the Utah ruling. In a statement, the company said it disagreed with the decision and would “continue to defend” its position that prediction markets fall under exclusive federal jurisdiction, pointing to the courts that have already ruled in its favor elsewhere.

What It Means Going Forward

For now, Utah’s decision hands state officials a clean legal win to point to as more states weigh cease-and-desist action against Kalshi and rival platforms. Governor Cox called the ruling an affirmation that Utah’s anti-gambling laws are “an appropriate way to protect our citizens” and are not preempted by federal law. With appeals pending in multiple circuits and no unified rule yet in place, prediction markets’ ability to offer sports contracts nationwide remains an open question — one that could reshape how social sportsbooks and other alternative betting products are regulated across the country.