A federal judge has ruled in favor of Utah’s anti-gambling laws over online prediction market Kalshi.
In February, Kalshi sued after lawmakers passed a law that added proposition bets to the state’s definition of gambling. The prediction market site argued that Utah couldn't treat its sports futures contracts as bets because it operates as a federally registered exchange governed by the Commodity Futures Trading Commission. In other words, that oversight supersedes state jurisdiction.
U.S. District Judge Robert J. Shelby disagreed, writing that state gambling laws don’t “prevent the CFTC from serving the public interest in regulating derivatives markets, preventing price manipulation, ensuring financial integrity, protecting market participants, and promoting innovations.” He said that Kalshi did not convince the court otherwise.
The court granted summary judgment for Utah and ordered the case closed.
Utah Attorney General Derek Brown celebrated the outcome.
"You can’t rebrand illegal gambling as a federal commodity,” he said in a statement. “Today a federal judge agreed with us. Kalshi bet that clever branding would beat Utah law. Kalshi lost and Utah won.”
The statewide gambling prohibition is enshrined in the Utah Constitution. Driven by the beliefs of The Church of Jesus Christ of Latter-day Saints, the state’s approach has been simple: don't build casinos, don’t allow lotteries and don’t let bookmakers set up shop.
But the birth of prediction markets like Kalshi created a new wrinkle for Utah
Kalshi’s site says you can “trade money on the outcomes of real world events.” There are a lot of different events like 'who will win the Super Bowl’, election results or even something as specific as whether or not U.S. Attorney for D.C. Jeanine Pirro would leave her post by 2027.
Gov. Spencer Cox has been a vocal critic of predictive market sites. On social media, he said that “prediction markets are gambling, full stop,” after the ruling.
“They are causing tremendous harm to countless American families,” he said. “Today’s ruling affirms that Utah’s anti-gambling laws are an appropriate way to protect our citizens and are not preempted by federal law.”
The state received widespread support in its fight against prediction markets, including from 23 federally recognised tribes and gaming associations.
