The federal law relied upon for sports prediction markets does not trump Utah’s blanket ban on gambling, a federal judge ruled on Tuesday.
- A federal judge ruled that Utah's gambling restrictions are not overridden by federal commodities law, denying a request from Kalshi that would block potential state enforcement.
- The decision may eventually allow Utah to pursue action against Kalshi's sports prediction markets, though the company says it will appeal.
- The ruling adds to the ongoing legal fight over whether sports prediction markets are federally regulated financial products or state-regulated gambling.
U.S. District Court Judge Robert Shelby denied Kalshi’s motion for a preliminary injunction against Utah and granted a motion for summary judgment by the state.
“Given the [Commodity Exchange Act’s] framework and the history of State regulation of gambling, the court cannot conclude the CEA is so pervasive that there is no room for the State of Utah to supplement it,” Shelby wrote.
The judge concluded that “the federal law relied upon by Kalshi does not preempt Utah’s ability to enforce its anti-gambling laws.”
Shelby's decision noted that Kalshi, “concerned that Utah intends to bring a criminal enforcement action against it to prohibit it from offering sporting event contracts,” filed the lawsuit against the state in February.
However, Tuesday’s decision will not be the final word in Utah, according to a spokesperson for the exchange.
“We disagree with today's decision and will appeal,” Jacki McGavick said in an email. “Multiple courts have already recognized that prediction markets fall under exclusive federal jurisdiction, and we will continue to defend that position.”
Mission: Not Impossible
At any rate, sports prediction markets continue to be a contentious topic, and Tuesday’s ruling now leaves open the possibility that Utah could pursue the enforcement action that had Kalshi so concerned.
The prediction market operator has already been forced to implement restrictions in Nevada and Michigan.
“Adding an additional category of prohibited participants in a sports-related event contract does not appear to be onerous,” Shelby wrote. “In short, Kalshi has not shown that compliance with both federal and state law is impossible.”
However, in Utah, all gambling, including sports betting, is illegal. Therefore, the state might be keener than most to crack down.
Utah’s attorney general also noted in a press release that the judge found it “implausible” that Congress would quietly undermine the historic state-level regulation of gambling via legislation aimed at the 2008 financial crisis.
“You can’t rebrand illegal gambling as a federal commodity, and today a federal judge agreed with us,” Attorney General Derek Brown said in a statement. “Utah's constitution bans gambling to protect Utah families, and my office will enforce that ban.”
Our prediction market legal tracker is now updated to the best of my ability.
— Geoff Zochodne (@GeoffZochodne) July 31, 2026
If something's missing, let me know. Lord knows I'm probably missing something with everything that's going on:https://t.co/0qB2enhYvh@Covers
Sports prediction markets have created a growing body of litigation in the U.S. over the legality of those event contracts. Indeed, over the past week there have been significant decisions in Minnesota, Wisconsin, and New York.
For many state regulators, the trading of those contracts is just sports betting by another name. For Kalshi and its federal regulator, the Commodity Futures Trading Commission (CFTC), it isn’t, and federal law puts the exchanges and their products beyond state-level oversight.
For the moment, sports event contracts offered by Kalshi are still trading in Utah. The coming appeal could delay any prohibition further, or perhaps permanently.
Nevertheless, Tuesday’s decision sided with the state, and found that the federal Commodity Exchange Act “provides for some State regulation.”
“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,” Judge Shelby wrote.
