A federal judge has ruled that Utah may apply its anti-gambling laws to Kalshi’s sports prediction contracts, delivering the first final federal judgment on the merits in the expanding legal dispute between prediction-market operators and US state regulators.
US District Judge Robert J. Shelby granted summary judgment to Utah on 4 August and rejected Kalshi’s request for a preliminary injunction. The decision closes the case at district-court level, although Kalshi has confirmed that it intends to appeal.
Kalshi filed the lawsuit in February after Utah officials signalled that they could pursue criminal enforcement over sports-related event contracts offered to residents. The operator sought a declaration that the federal Commodity Exchange Act prevented Utah from applying its gambling statutes to a federally regulated designated contract market.
Shelby rejected that argument, finding that the Commodity Exchange Act does not expressly or implicitly remove Utah’s authority to enforce its own anti-gambling rules.
The ruling centred on the relationship between federal derivatives regulation and the states’ longstanding role in controlling gambling. The court found no clear indication that Congress intended to displace state gambling powers when it expanded federal oversight of swaps through the Dodd-Frank Act following the 2008 financial crisis.
Kalshi operates as a designated contract market under the supervision of the Commodity Futures Trading Commission. It allows customers to buy and sell contracts whose value depends on whether a specified event occurs.
The platform began offering sports-event contracts in January 2025. According to the Utah judgment, its markets have covered subjects including match winners, victory margins, losing streaks, player scoring outcomes and other events connected to major sporting competitions.
Kalshi maintained that the CFTC’s exclusive jurisdiction over transactions conducted on registered exchanges prevented Utah from separately treating those products as gambling. The court concluded that exclusive federal oversight of derivatives does not automatically provide immunity from generally applicable state gaming laws.
A substantial part of the 25-page opinion examined Section 16(e)(2) of the Commodity Exchange Act. That provision expressly preempts state gaming laws for certain limited categories of transactions, including specified off-exchange swaps, foreign-currency deals, government securities, hybrid instruments and banking products.
Shelby determined that Kalshi’s sports contracts do not fall within those listed categories. The existence of narrowly defined preemption provisions supported the conclusion that Congress had not broadly barred states from regulating every transaction offered through a designated contract market.
The judge did not decide whether Kalshi’s sports-event contracts should legally be classified as swaps. Instead, the ruling found that Utah could enforce its gambling laws regardless of how that particular classification question is ultimately resolved.
Kalshi also argued that blocking Utah residents would conflict with CFTC regulations requiring exchanges to provide impartial access to their markets. Shelby rejected that defence, finding that the federal requirement is primarily intended to prevent improper discrimination based on a participant’s financial or operational condition rather than to prohibit geographic restrictions.
The court noted that Kalshi already excludes several categories of people from particular markets through its terms and conditions. Preventing Utah-based users from accessing sports contracts would therefore not make compliance with both state and federal requirements impossible.
Utah law broadly defines gambling as risking something of value on an outcome involving chance in exchange for a potential return. It specifically includes proposition bets based on an individual action, statistic, occurrence or non-occurrence.
Providing online gambling to someone in Utah can constitute a third-degree felony, while entities that assist gambling and expect to receive an economic benefit can face separate criminal penalties.
Utah Attorney General Derek Brown welcomed the outcome, arguing that describing sports wagering as a federally regulated commodity does not place it beyond the state’s gambling restrictions. His office said the ruling allows Utah to proceed with enforcement against Kalshi’s sports contracts.
The judgment carries broader importance because previous disputes involving Kalshi and state regulators have generally focused on temporary restraining orders, preliminary injunctions or jurisdictional questions. The Utah ruling resolves the central federal-preemption claim and enters judgment for the state.
Kalshi’s planned appeal will move the dispute to the US Court of Appeals for the Tenth Circuit. The company continues to maintain that event contracts offered on a CFTC-regulated exchange fall exclusively within the federal commodities framework.
Courts and regulators across the country remain divided over that position. States including Nevada, New York, Washington and others have pursued enforcement or litigation alleging that sports prediction contracts amount to unlicensed gambling, while Kalshi has repeatedly argued that state intervention interferes with the federal regulatory system.
The appeal could therefore become another major test of whether federally regulated prediction markets must also comply with individual state gambling regimes.