A judge from a U.S. District Court in Utah has determined that the Commodity Exchange Act (CEA) does not override the state's anti-gambling regulations, allowing Utah to enforce its gambling laws against Kalshi's sports prediction markets. This ruling represents a significant setback for the federally regulated operator.
Judge Robert J. Shelby denied Kalshi's motion for a preliminary injunction, issued a summary judgment favoring Utah officials, and instructed the court clerk to conclude the case. The judge dismissed Kalshi's assertion that the Commodity Futures Trading Commission (CFTC) holds exclusive authority over federally regulated derivatives markets, which would prevent states from overseeing its event contracts as per the Supremacy Clause of the U.S. Constitution.
In February, Kalshi initiated legal action against Utah, naming Governor Spencer Cox and Attorney General Derek Brown as defendants. The company claimed that Utah was poised to obstruct its federally regulated sports event contracts, arguing that the state's actions would infringe on the federal government's exclusive right to regulate derivatives trading on CFTC-regulated exchanges.
Judge Shelby ruled that the CEA does not explicitly or implicitly preempt Utah's gambling laws, asserting that state gambling enforcement can coexist with federal commodities regulation. He noted that the jurisdictional framework of the CEA