The US government has taken legal action against Utah to prevent the state from enforcing its gambling ban against Kalshi. This makes Utah the tenth state to be sued by the federal agency responsible for regulating prediction markets.
Utah Files Lawsuit and Defends Total Ban
Utah initiated legal proceedings against Kalshi in a state court, seeking a court order to block the platform from offering wagers on sports, elections, politics, and various other events. Republican Utah Attorney General Derek Brown stated that Kalshi operates an online casino under the guise of a prediction market in violation of state statutes. He noted that Utah not only outlaws gambling by statute but is also one of only two states with a constitutional prohibition against it, maintaining this stance for 130 years.
Previously, Kalshi filed a preemptive federal lawsuit attempting to stop Utah from enforcing its gambling laws, but the state successfully defeated that effort. Following Utah’s ongoing push to close down the platform, the state now faces a federal lawsuit brought by the US Commodity Futures Trading Commission (CFTC).
Federal Authority and Market Implications
The CFTC stated that it initiated legal action against Utah to halt state-level attempts at shutting down federally registered contract markets using local laws. The commission explained that Utah’s civil enforcement actions against CFTC-regulated markets and other businesses interfere with Congress’s intent to federally preempt state regulations.
A successful state effort to shut down Kalshi could create significant challenges for its primary competitor, Polymarket, as well as sports betting platforms such as DraftKings and FanDuel. These companies promote their availability across all US states through various offerings, which include prediction-market platforms operating in states like Utah, and both are registered with the CFTC.
