Kalshi’s Federal Shield Crumbles Under Utah’s Anti‑Gambling Law
Kalshi’s legal troubles are deepening on multiple fronts, with a federal judge in Utah delivering a significant setback to the prediction market platform.
Kalshi sought an injunction to block state enforcement actions, arguing that its CFTC‑regulated status as a designated contract market should take precedence over Utah’s anti‑gambling statutes.
Judge Robert Shelby rejected this claim, granting summary judgment to the state and ruling that federal law does not protect Kalshi from local gambling prohibitions. This effectively prevented the firm from avoiding a “state‑by‑state patchwork” of regulations, which it had described as operationally unworkable.
Shelby, however, found that barring certain participants from sports‑related contracts would not pose an undue burden. Utah Governor Spencer Cox, who has previously likened such platforms to a menace targeting young men, welcomed the decision.
Meanwhile, Kalshi is facing parallel action in New York, where the Attorney General’s lawsuit has been transferred to a federal court. This has rendered the request for a preliminary injunction moot. A proposed 6% tax on trades, estimated to yield $10 billion over five years, was dismissed by Governor Kathy Hochul, who stated that no company can ‘buy’ an exemption from state gaming laws. Similar proceedings have also been initiated in Ohio and Tennessee, and Kalshi has agreed to exit Nevada by August 12 following geoblocking failures.
With mounting legal pressure across the country, the company’s reliance on federal oversight appears increasingly fragile, casting serious doubt over its broader business model.
