Kalshi plans appeal after Utah judge backs state gambling enforcement powers

Kalshi is heading toward an appeal after a federal judge in Utah ruled that the Commodity Exchange Act does not shield the prediction-market company’s sports contracts from state gambling laws.

U.S. District Judge Robert J. Shelby sided with Utah officials on Tuesday (August 4), granting them summary judgment while rejecting Kalshi’s bid for a preliminary injunction. The company wanted the court to find that federal commodities regulation prevented Utah from enforcing its anti-gambling statutes against Kalshi.

Legal expert Daniel Wallach said August 5 that Kalshi will take the decision to the U.S. Court of Appeals for the Tenth Circuit. It would bring prediction-market appeals into seven of the 13 federal judicial circuits, he said, while the Seventh and Eighth circuits are also expected to join.

The dispute followed public criticism of sports prediction markets from Gov. Spencer Cox. Worried that Utah could pursue criminal enforcement to halt its sports event contracts, Kalshi sued on February 23. It sought a ruling that the CEA overrides Utah laws that “effectively regulates” Kalshi’s federally regulated designated contract market.

Utah retains gambling authority despite federal commodities oversight in Kalshi case

Kalshi’s case centers around the CFTC’s authority over federally regulated markets. Kalshi maintained that the Commodity Futures Trading Commission’s “exclusive jurisdiction” over swaps on designated contract markets meant Utah could not enforce its gambling statutes against those contracts.

Shelby reached the opposite conclusion, finding no express preemption of Utah’s enforcement authority in the CEA’s jurisdiction provision. Because the statute preserves roles for both state and federal courts, he concluded that it “strongly signals there is room for State regulation” alongside federal commodities oversight.

Kalshi also failed to persuade Shelby that federal law implicitly displaced Utah’s authority. He pointed to Congress’ position that states bear primary responsibility for determining what gambling may legally operate within their borders. After examining field and conflict preemption, Shelby found neither blocked Utah.

Kalshi’s conflict-preemption argument focused partly on access requirements. The company said Utah could force it to block state residents even though federal rules require designated contract markets to offer impartial access. It also argued that separate state gambling regimes would undermine Congress’ aim of establishing a national market with uniform rules. Shelby found Utah enforcement could still coexist with federal requirements.

Kalshi began offering the sports contracts at issue in January 2025. The ruling described markets tied to losing streaks, victory margins, specified touchdowns by players or teams, and the identity of the Super Bowl singer.

Utah, by contrast, classifies “proposition bets” involving an individual action, statistic, occurrence or non-occurrence as gambling. Under provisions discussed in Shelby’s ruling, offering online gambling there can amount to a third-degree felony.

The decision was already being cited outside Utah by August 4, when New York’s Attorney General’s Office submitted Shelby’s ruling as supplemental authority in another federal prediction-market case.

Kalshi’s expected Tenth Circuit appeal will now put Shelby’s conclusion — that state gambling enforcement can operate alongside federal commodities regulation — before an appellate court.

Featured image: Canva / Kalshi

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