SALT LAKE CITY — A federal judge has ruled that Utah can crack down on Kalshi and other predictive markets under the state's constitutional prohibition on gambling.
In a ruling handed down on Tuesday, U.S. District Court Judge Robert Shelby granted Utah's motion to dismiss the case, rejecting Kalshi's stance that it is not subject to Utah's anti-gambling laws. Kalshi argued it was regulated under the federal Commodity Exchange Act.
But Judge Shelby disagreed, writing: "...the court concludes the federal law relied upon by Kalshi does not preempt Utah’s ability to enforce its anti-gambling laws."
After Utah political leaders began publicly criticizing Kalshi and its app where people can place money on "predictions" of events from sports to politics, Kalshi sued Utah pre-emptively fearing the state was preparing to crack down on its operations. Utah adopted the position predictive markets like Kalshi were always forbidden because of Utah's anti-gambling laws that go back to the 1800s.
In a statement, Utah Attorney General Derek Brown celebrated the ruling.
"You can’t rebrand illegal gambling as a federal commodity, and today a federal judge agreed with us. Kalshi bet that clever branding would beat Utah law. Kalshi lost and Utah won," he said in a statement. "Utah's constitution bans gambling to protect Utah families, and my office will enforce that ban. Gambling is gambling no matter what any company calls it."
It is unclear if Utah will begin enforcement and start banning Kalshi and similar companies from operating within the state. The Utah Division of Consumer Protection and the Utah Attorney General's Office were evaluating the ruling on Tuesday.
A Kalshi spokesperson vowed an appeal.
"We disagree with today's decision and will appeal. Multiple courts have already recognized that prediction markets fall under exclusive federal jurisdiction, and we will continue to defend that position," the company said in an email.
