Key Highlights
- Kalshi loses its emergency appeal bid, allowing Utah to enforce its anti-gambling laws against the platform.
- States are gaining ground in court, with states winning 35 of 41 rulings involving prediction market injunctions and appeals.
- The Supreme Court could decide the bigger fight, as New Jersey asks whether states can regulate sports contracts offered by prediction markets.
Kalshi has suffered another setback in its fight with state regulators after the 10th Circuit Court of Appeals denied its request for an emergency injunction against Utah.
The decision allows Utah to enforce its anti-gambling laws against the prediction market while Kalshi continues its appeal of an earlier court ruling.
The case is about a simple but important question: are Kalshi’s sports contracts financial products or sports bets? Utah says they are sports bets and should follow the state’s gambling laws. Kalshi disagrees and says its contracts are swaps that fall under the control of the US Commodity Futures Trading Commission (CFTC).
Kalshi loses its emergency appeal bid
In a post on X, legal expert Daniel Wallach said that the appeals court rejected Kalshi’s emergency motion for an injunction pending appeal. Kalshi had asked the court to stop Utah from taking civil or criminal action against it until the appeal was decided. With the request denied, that protection is no longer in place.
The latest ruling follows a federal judge’s decision last month that went against Kalshi. The judge ruled that Utah’s anti-gambling laws apply to Kalshi’s sports contracts and upheld the state’s summary judgment in the case.
Kalshi had originally brought the lawsuit against Utah earlier this year as it tried to prevent the state from applying its gambling rules to the platform.
States continue to challenge prediction markets
Meanwhile, the fight is happening not only in Utah. States across the US have been challenging prediction market platforms over sports contracts. For instance, New York City, Connecticut, and Baltimore have each taken the firm to court.
Their argument is that companies such as Kalshi are offering sports betting without the licenses required by state gambling laws.
Kalshi and other prediction markets see the issue differently. They argue that their sports contracts are swaps and that federal law gives the CFTC exclusive power over them. In simple terms, Kalshi’s position is that states should not be able to use their gambling laws to control contracts already covered by federal financial rules.
New Jersey takes the dispute to the Supreme Court
That disagreement has pushed the issue into several federal courts. The legal fight could also reach the US Supreme Court. New Jersey has asked the Supreme Court to decide whether states have the power to regulate sports betting on prediction markets such as Kalshi.
The state wants the court to review a ruling that gave the CFTC exclusive jurisdiction over these contracts.
States gain the upper hand in court
For now, the courts have largely given states the stronger hand. Wallach said states have won 12 federal court rulings in a row against prediction markets since the Minnesota decision. He also said states have won 35 of 41 rulings involving requests for preliminary injunctions, temporary restraining orders, or stays and injunctions pending appeal.
That puts states at an 85% success rate in those cases, according to Wallach. The Minnesota case was one of the exceptions. There, a federal judge granted a preliminary injunction blocking the state’s prediction market ban just days before the ban was due to begin.
Other courts have since ruled against Kalshi and similar platforms. The 9th Circuit Court of Appeals, for example, ruled that sports contracts offered by prediction markets are sports bets.
The Supreme Court question now adds another layer to the growing battle. Despite New Jersey’s petition, traders on Polymarket currently give the top court only a 34% chance of accepting a sports event contract case by the end of the year.
For Kalshi, the Utah ruling means the fight continues without the temporary shield it wanted during its appeal. For states, it gives them another court decision supporting their push to treat sports prediction contracts as gambling rather than financial trading.
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