Kalshi sued Gov. Spencer Cox and other Utah officials in federal court as it seeks to keep offering prediction markets in the state.
The complaint, filed Monday in the U.S. District Court for the District of Utah, sought injunctive and declaratory relief and argued Utah is intruding on federal authority over derivatives trading overseen by the Commodity Futures Trading Commission.
Key Takeaways
- Kalshi filed a federal lawsuit in Utah seeking to prevent expected state enforcement tied to anti-gambling laws.
- The company argued federal commodities law preempts state efforts to regulate event contracts traded on its exchange.
- A Tennessee ruling granted Kalshi a preliminary injunction, adding to mixed outcomes in similar disputes nationwide.
Kalshi alleged Utah officials, including Cox, the state Attorney General, and a U.S. senator, had been speaking out against prediction markets and pointed to statements it described as signaling imminent enforcement intended to prevent the company from offering event contracts in the state.
In addition, Kalshi asserted state officials repeatedly said they believed the platform is operating illegally under Utah's anti-gambling laws.
The complaint also cited a recent op-ed by Attorney General Derek Brown that referenced Kalshi by name and described a plan to address prediction markets operating in the state. Kalshi said its counsel tried multiple times to contact the Attorney General’s office to ask whether Utah was preparing to take action but received no response.
Kalshi argued Utah’s stated intent conflicts with the federal framework for derivatives trading on designated exchanges. It said the state’s efforts are preempted under express preemption, field preemption, and conflict preemption and asked the court for preliminary and permanent injunctive relief alongside declaratory relief.
The complaint also noted multiple states issued cease-and-desist letters to prediction markets over the past year, and that Kalshi and other platforms sued state officials in some states to stop potential enforcement.
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Kalshi blocks Tennessee injunction
While Kalshi looks for relief in Utah, it recently received some in Tennessee. The operator obtained a preliminary injunction that barred officials from enforcing the state's sports betting laws against the platform’s event contracts while the case proceeds.
U.S. District Judge Aleta A. Trauger found Kalshi was likely to succeed in its arguments, including its position that the sports event contracts qualified as swaps under the Commodity Exchange Act, as opposed to sports betting.
Tennessee regulators had sent Kalshi a cease-and-desist letter warning of enforcement under the Tennessee Sports Gaming Act for operating without a state license. Kalshi sued last month, seeking declaratory and injunctive relief.
Judge Trauger rejected the state’s outcome-versus-occurrence argument, finding that the outcome of an event could also be an occurrence.
The Tennessee ruling differed from outcomes in other jurisdictions. In Maryland and Nevada, injunctions were denied, and Nevada filed a civil enforcement action against Kalshi. In New Jersey, they were granted, while motions remained pending in Ohio, New York, and Connecticut.
