Kalshi Faces Setback in Utah: Judge Rules Gambling Laws Apply

Kalshi, a prediction market platform, has faced another setback in Utah after a judge ruled that state gambling laws apply to its operations. The company filed a lawsuit in February to stop Utah from regulating its platform as a gambling firm, but US District Judge Robert J. Shelby dismissed the lawsuit, stating that federal oversight does not protect the company from state regulation where gaming laws apply.

Judge Shelby's decision aligns with the stance of Utah Attorney General Derek Brown, who welcomed the ruling. Brown emphasized that Utah's constitution bans gambling to protect Utah families. He also argued that Kalshi's strategy of relying on clever branding would not shield it from Utah’s gaming laws.

Kalshi had argued that event contracts on sports are not the same as gambling and are regulated by the Commodity Futures Trading Commission (CFTC). However, the judge disagreed, stating that state regulation of gambling laws does not prevent the CFTC from serving the public interest in regulating derivatives markets. Utah Governor Spencer Cox also welcomed the decision, stating that prediction markets cause tremendous harm to countless American families.