Federal Judge Finds Kalshi in Violation of Utah Anti-Gambling Laws
Jesse M. Cox Published 07/08/2026
A federal judge has ruled that prediction market Kalshi cannot hide behind CFTC regulations to avoid Utah's anti-gambling laws. Even though Kalshi is federally regulated by the Commodity Futures Trading Commission (CFTC), the judge ruled that this didn't preclude the prediction market site from the need to obey the anti-gambling laws that are in place in Utah.
Utah law currently prohibits all forms of sports betting in the state. Kalshi is offering sports-event contracts to Utah players, arguing that as derivative trades, they are not sports betting. The judge also denied Kalshi's request for an injunction that would have allowed it to continue to offer sports-event contracts in Utah.
Kalshi will be required to geofence its product in Utah
A summary judgment was granted to Utah by U.S. District Judge Robert Shelby. The judge also denied Kalshi's request for an injunction. His ruling only applies to Kalshi's sports-event contracts and any other sports-related contracts. In making this ruling, Judge Shelby is rejecting Kalshi's argument that the federal oversight it gets from the CFTC overrides any state regulator.
“The court concludes the federal law relied upon by Kalshi does not preempt Utah’s ability to enforce its anti-gambling laws,” Shelby wrote in his ruling, according to reporting by Utah Politics. “It would be inconsistent for Congress to allow States to regulate their gambling laws but to simultaneously require States to provide citizens access to every event contract, including those that constitute gambling under State law.”
In February, Kalshi filed a lawsuit against Utah in U.S. District Court. Kalshi's lawyers were arguing that any attempt to regulate prediction markets on the state level is intruding into the “federal government’s exclusive authority to regulate derivatives trading on exchanges” that are under the rule of the CFTC. This, they further argued, violates the Supremacy Clause of the United States Constitution.
Based on Judge Shelby's ruling, Kalshi must now geofence its product in Utah, or risk facing penalties for offering illegal gambling in the state. Lawyers for Kalshi indicated that the company was planning to appeal the judge's ruling.
A look at what Kalshi is offering to Utah prediction market players
Kalshi currently offers several prediction markets in Utah. The selection includes election outcomes, pro soccer, and Utah Jazz NBA games. There are also markets on which in-state college football teams will make the postseason CFB playoff. Utah argued successfully that these markets are exactly the kinds of sports props that violate its constitution.
Earlier this year, state lawmakers moved to crack down on daily fantasy sports sites like DraftKings and FanDuel from offering pick'em plays to DFS players in the state. In March, Utah Governor Spencer Cox signed a new bill, House Bill 243, into law. Its purpose was to clarify that a proposition bet falls within the definition of gambling.
State government officials celebrate their win over Kalshi
Naturally, state representatives are celebrating Utah's court success against Kalshi.
“You can’t rebrand illegal gambling as a federal commodity, and ... a federal judge agreed with us,” Utah Attorney General Derek Brown said in a statement after the ruling was announced. “Kalshi bet that clever branding would beat Utah law. Kalshi lost, and Utah won. 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.”
Governor Cox was expressing his views on Judge Shelby's decision on social media.
“Prediction markets are gambling, full stop," read Cox's post on X. "They are causing tremendous harm to countless American families. [This] ruling affirms that Utah’s anti-gambling laws are an appropriate way to protect our citizens and are not preempted by federal law.”