TLDR A federal judge in Utah entered the first final judgment against Kalshi in ongoing state-level litigation. Judge Robert J. Shelby ruled that federal commodities law does not block Utah from enforcing its gambling laws. Kalshi’s sports-event contracts fall outside limited exemptions listed in Section 16(e)(2) of the CEA. The court also rejected Kalshi’s argument that Utah’s law conflicts with CFTC impartial access rules. Kalshi plans to appeal, sending the case to the Tenth Circuit Court of Appeals.
A federal judge in Utah has issued the first final ruling in a string of legal fights between states and Kalshi. The prediction market operator has been sued by several states over its sports-event contracts.
Judge Robert J. Shelby granted summary judgment to Utah on Tuesday. He ruled that the Commodity Exchange Act does not stop Utah from applying its own gambling laws to Kalshi’s contracts.
The decision closes the case at the district court level. Kalshi has said it will appeal to the Tenth Circuit Court of Appeals.
Court Rejects Preemption Claims
Kalshi argued that federal commodities law overrides state gambling rules. The company has made this same argument in cases filed in other states.
Judge Shelby disagreed. He wrote that Congress did not intend to remove state control over gambling when it updated federal commodities law through the Dodd-Frank Act.
The judge pointed to Section 16(e)(2) of the CEA. This section limits when federal law can override state gaming laws.
He said the exemptions only cover specific cases. These include some off-exchange swaps, foreign currency deals, and certain banking products.
Kalshi’s sports-event contracts do not fall into any of those categories, according to the ruling. Because of this, the judge said state law still applies.
Utah Attorney General Derek Brown responded to the decision. He said Kalshi