Estimated read time: 3-4 minutes
- Prediction market Kalshi is suing Utah over plans to regulate proposition betting in the state.
- The suit claims the state can't preempt federal commodity trading regulations.
- Gov. Spencer Cox pledges to "use every resource" at his disposal to win in court.
SALT LAKE CITY — A prediction market is suing Utah over plans to regulate proposition betting that it says would run afoul of federal regulations.
Kalshi is a New York-based prediction market that allows users to place "event contracts" on future outcomes and earn a payout if they are correct. Those transactions are regulated through the Commodity Futures Trading Commission.
In a lawsuit filed in U.S. District Court, the company said Utah has plans to prevent the company from offering contracts in the state and asked the courts to block any enforcement that "interferes with the operation and function of plaintiffs' futures market."
"Plaintiff KalshiEX LLC believes the governor of Utah and the Attorney General's Office of Utah will imminently bring an enforcement action against Kalshi with the intent to prevent Kalshi from offering event contracts for trading on its federally regulated exchange," the complaint states. "Defendants have repeatedly represented that they believe Kalshi is operating unlawfully under Utah anti-gambling laws."
The lawsuit points to a couple of posts from Gov. Spencer Cox and an op-ed written by Attorney General Derek Brown in the Deseret News on Sunday. After Commodity Futures Trading Commission Chairman Mike Selig announced that his agency would "defend its exclusive jurisdiction" over prediction markets last week, Cox took to X calling the markets "gambling — pure and simple."
"They are destroying the lives of families and countless Americans, especially young men," he wrote. "They have no place in Utah. Let me be clear, I will use every resource within my disposal as governor of the sovereign state of Utah, and under the Constitution of the United States to beat you in court."
He followed that up last Thursday, saying Utah is "ready to defend our laws in court and protect Utahns from companies that drive addiction, isolation and serious financial harm."
In his op-ed, Brown argued that prediction markets are "the newest iteration of gambling" and said he didn't see a difference between betting and trading futures.
"Although traditional sports betting apps are illegal under Utah law, these platforms argue that they merely allow users to hedge their risk," he wrote. "But what is the real risk to hedge when you are simply predicting whether LeBron James will score more or less than another player? It's simply a bet, dressed up in different clothing."
The lawsuit also comes as the state Legislature is advancing a bill that would clarify that proposition betting — or betting placed on specific players or events during games — falls under the state's definition of gambling, which is prohibited by the Utah Constitution. HB243 has passed the House and a Senate committee and is awaiting consideration on the Senate floor.
But Kalshi says its contracts are lawful thanks to a carveout in Utah's anti-gambling laws that allows for "lawful business." Its lawsuit claims Kalshi's attorneys made "multiple attempts" to contact Brown about potential action against the company but were "met with silence, even though the Utah AG had previously been willing to communicate with counsel."
Asked about the lawsuit on Tuesday, Senate President Stuart Adams, R-Layton, said he is "standing with the governor on this one."
