Kalshi has lost an emergency injunction request at the 10th Circuit, leaving Utah free to enforce its gambling laws while the prediction market operator pursues its appeal.
Summary
- The 10th Circuit denied Kalshi’s request for an injunction pending appeal.
- Utah may now bring civil or criminal enforcement action against the prediction market operator.
- States have won 12 consecutive federal rulings since an earlier Minnesota decision favored prediction markets.
- New Jersey has asked the Supreme Court to settle the federal-versus-state jurisdiction dispute.
Utah can enforce its gambling laws against Kalshi
Legal analyst Daniel Wallach said in an X post that the 10th U.S. Circuit Court of Appeals had denied Kalshi’s emergency motion for an injunction pending appeal.
Kalshi sought temporary protection after a federal judge allowed Utah to apply its gambling restrictions to the platform’s sports event contracts. The requested order would have stopped the state from bringing civil or criminal proceedings while the appeal remained before the 10th Circuit.
With the request denied, Wallach said Utah may enforce its laws during the appeal. The appellate court’s decision does not settle Kalshi’s challenge to the earlier ruling, but it removes the temporary protection the company sought against state action.
Kalshi initially sued Utah earlier in 2026 as the state prepared to tighten its restrictions on prediction markets. The company argued that Utah could not regulate contracts listed on an exchange registered with the Commodity Futures Trading Commission.
In August, U.S. District Judge Robert Shelby rejected Kalshi’s request to prevent enforcement. According to the Associated Press, Shelby found that the federal law cited by the platform did not stop Utah from applying its gambling rules.
Utah Attorney General Derek Brown said after the district court ruling that his office intended to enforce state law, although officials were still considering their available options. Utah’s rules prohibit proposition betting on events within a game, a category that accounts for an important part of the sports products offered by prediction markets.
Kalshi disagreed with Shelby’s decision and moved the dispute to the 10th Circuit. Its emergency filing sought protection during that process, rather than a final appellate ruling on whether federal derivatives law overrides Utah’s restrictions.
Kalshi argues that sports contracts fall under CFTC control
Kalshi’s legal position rests on its status as a CFTC-regulated designated contract market. The company classifies its sports products as event contracts or swaps governed by the federal Commodity Exchange Act, rather than wagers controlled by individual states.
State regulators dispute that description. Their lawsuits and enforcement actions generally argue that contracts tied to game results, player performance, and other sporting events function as sports bets, requiring operators to follow state licensing, age-limit, and consumer-protection rules.
The distinction determines whether Kalshi can provide the same sports markets across the United States or must change its products according to local gambling laws. State victories could require geofencing, product removals, or licensing in jurisdictions that classify the contracts as wagers.
For American users, the unresolved issue means access may depend on where they live. As crypto.news previously reported, 38 active prediction-market cases were pending across 21 states as of Sep. 8, while exchanges had received cease-and-desist letters in at least 10 jurisdictions, according to Casino.org’s Prediction Market Litigation Tracker.
Court orders have already produced different rules among states. Washington directed Kalshi to restrict contracts covering sports, elections, politics, entertainment, culture, technology, and science, while allowing markets tied to commodities, climate, economics, and finance to remain available.
In Michigan, a preliminary injunction required Kalshi to keep sports contracts unavailable to residents. The Michigan court order exposed the platform to possible fines of $500,000 for every day a court found it out of compliance.
States extend their winning run in federal courts
Wallach said the Utah order extended a run of 12 consecutive federal court decisions favoring states over prediction market operators since a Minnesota ruling had gone the other way.
In the Minnesota case, a federal judge granted preliminary relief that blocked the state’s proposed prediction-market ban shortly before it was due to take effect. Later decisions, however, have increasingly allowed regulators to apply state gambling laws while the underlying cases proceed.
One of the most important rulings came from the 9th U.S. Circuit Court of Appeals on Aug. 28. A unanimous panel concluded at the preliminary stage that Kalshi’s sports products were likely bets rather than swaps, allowing Nevada regulators to enforce their gaming requirements.
“The CFTC is not a national gambling regulator,” Circuit Judge Ryan Nelson wrote in the 9th Circuit opinion.
The Nevada appellate decision conflicted with an April ruling from the 3rd Circuit in Kalshi’s case against New Jersey. In that dispute, a divided panel kept an injunction in place and found that Kalshi had shown a reasonable likelihood of proving that its sports event contracts qualify as swaps under federal law.
According to Wallach, states have prevailed in 35 of 41 rulings involving requests for preliminary injunctions, temporary restraining orders, stays, or injunctions pending appeal. The figure represents an 85% success rate for states in those procedural contests.
Such orders do not always decide the full legal merits of a case. Courts considering emergency or preliminary relief assess factors including the applicant’s likelihood of success, possible irreparable harm and the public interest before the underlying litigation is complete.
Supreme Court petition could settle the jurisdiction dispute
New Jersey has asked the U.S. Supreme Court to review the 3rd Circuit decision that favored Kalshi. Filed on Sep. 2, the state’s petition asks whether the Commodity Exchange Act prevents states from applying sports-gambling laws to contracts offered through a CFTC-registered market.
The Supreme Court petition argues that Congress did not clearly remove state authority over sports wagering when it passed the Dodd-Frank Act. New Jersey also disputes the 3rd Circuit’s finding that the contracts may qualify as swaps covered by the CFTC’s exclusive jurisdiction.
Kalshi has maintained that federal oversight preempts conflicting state restrictions. Addressing New Jersey’s filing in a statement previously shared with Front Office Sports, the company said it remained confident in the lower courts’ rulings and that the petition had not changed its position.
The Supreme Court has not agreed to hear the case. Kalshi may respond to the petition before the justices decide whether to grant review, a step that requires support from at least four members of the court.
Polymarket traders were assigning a 31% probability that the Supreme Court would accept a sports event contract case by the end of 2026, according to market data cited in the original report. A prediction-market price represents participants’ trading positions rather than a judicial forecast or confirmation that the court will act.
