A federal court allows Utah to carry on against Kalshi

• A Court of Appeals has denied a request for injunction against the state of Utah
• Kalshi was seeking the injunction to prevent the state from applying local gaming laws to its offer
• A judge in Iowa also recently rendered a similar decision

Utah is the latest state where a court has decided to allow the state to continue to push back against the onslaught of sports event contracts, and Kalshi in particular. A two-judge panel denied an emergency injunction on Tuesday, allowing Utah to continue to move against Kalshi based on the state’s gaming laws.

The judges, however, did not lean in on whether the core arguments of either side were correct insofar as the legitimacy of sports event contracts as financial or gambling products were concerned.

Utah's appeals denial to grant injunction puts Kalshi on the backfoot again

Like similar developments in other states, this question could ultimately be resolved by the Supreme Court of the United States. For the time being, the 10th U.S. Circuit Court of Appeals has sided with the state.

Kalshi argued in its complaint that it operates as a contract market and is regulated under the Commodity Futures Trading Commission, which makes it immune to local gaming laws.

The exchange further claimed that it would suffer irreparable harm because it would be exposed to criminal and civil liability if it was decided that Kalshi was subject to state gaming laws instead of the Commodity Exchange Act and federal oversight.

And not least, the exchange insisted that gaming regulators were attempting to preempt federal regulation. The current decision by the Court of Appeals follows a previous decision by U.S. District Judge Robert J. Shelby rendered against Kalshi in which the judge again sided with the state instead.

For the time being at least, because of the Tuesday ruling, Kalshi will be subject to enforcement from the state’s gambling regulators.

Kalshi is facing similar pressure elsewhere

Just about the same time, a federal judge in Iowa has arrived at the same conclusion.

While not outright arguing that the CFTC and the Commodity Exchange Act had no bearing on sports event contracts, US DistrictJudge Stephen Locher expressed doubt that the original authors of the bill had meant it to cover things such as sports betting.

Judge Locher also allowed Iowa to continue to try to regulate Kalshi’s local offer under the state’s gaming laws, but refrained from arriving at a conclusive decision whether sports event contracts were indeed a form of gambling.

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