Utah judge rules state gambling laws can be enforced against Kalshi
The federal court rejected Kalshi’s argument that the Commodity Exchange Act overrides Utah’s anti-gambling laws.
US.- A federal judge in Utah has ruled that the Commodity Exchange Act (CEA) does not prevent the state from enforcing its anti-gambling laws against Kalshi’s sports event contracts. US District Judge Robert J. Shelby granted summary judgment in favour of Utah against the prediction market operator, concluding that the CEA does not preempt the state’s gambling laws.
The decision closes the case at the district court level, although Kalshi has confirmed that it will appeal to the Tenth Circuit Court of Appeals. Previous cases in states such as Minnesota, Nevada, Michigan and New York, have seen rulings on preliminary injunctions but not final decisions on the underlying legal disputes.
Court rejects Kalshi’s pre-emption arguments
As in its other lawsuits, Kalshi argued that federal commodities law gives the Commodity Futures Trading Commission (CFTC) exclusive authority over its contracts, preventing states from applying their own gambling laws. Judge Shelby rejected that position, finding that the CEA neither expressly nor implicitly overrides Utah’s authority to regulate gambling.
The opinion also states that Congress did not intend to remove states’ traditional authority over gambling when it expanded the CEA through the Dodd-Frank Act. After reviewing Section 16(e)(2) of the statute, the court concluded that federal pre-emption applies only in limited circumstances, which do not include Kalshi’s sports event contracts.
The judge also rejected Kalshi’s argument that complying with Utah law would conflict with CFTC rules requiring impartial market access. According to the opinion, the company failed to show that it would be impossible to comply with both federal regulations and state gambling laws, particularly given that Kalshi already restricts participation in certain contracts under its own terms and conditions.
Utah Attorney General Derek Brown welcomed the ruling, saying: “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.”
