A federal court in Utah has rejected Kalshi's arguments and upheld the state's right to apply its gambling laws to the prediction market platform. Judge Robert Shelby dismissed the company's position that its contracts are financial instruments, not a form of gambling.
Kalshi argued it is subject only to federal oversight by the Commodity Futures Trading Commission (CFTC) and not bound by state gambling laws. Shelby disagreed: 'The application of state gambling laws does not conflict with CFTC regulation of derivatives markets.' The judge granted summary judgement and closed the case.
The company has already announced it will appeal. It says several courts have recognised that prediction markets fall under exclusive federal jurisdiction. The appeal will be filed with the Tenth Circuit — the seventh of thirteen federal circuits where disputes over prediction platforms are under way.
The ruling came a month after New York's attorney general sued Kalshi seeking $36bn in damages. Utah Governor Spencer Cox commented: 'Prediction markets are gambling, period. Today's decision confirms that Utah's laws protect our citizens and are not overridden by federal law.'
Attorney General Derek Brown added: 'You cannot rebrand illegal gambling as a federal commodity.' His office noted that Kalshi offers contracts on match outcomes, player performances and even who will sing at the Super Bowl. In Utah, offering online gambling is a third-degree felony.
The CFTC itself takes the opposite view: according to Chairman Michael Selig, gambling is what happens exclusively in casinos, while prediction platform contracts are regulated federal swaps. Trading volumes on prediction markets continue to grow, most of it on sports contracts.
