Utah News Dispatch
Prediction market exchange Kalshi sues Utah over proposed prop betting ban
Utah lawmakers are advancing a bill that would include proposition betting under the state’s prohibition on gambling. (Stock photo by SolStock/Getty Images)
The prediction market exchange Kalshi is suing Utah in federal court in anticipation of a law — which hasn’t yet passed, but is advancing — that would ban proposition betting in the state.
Kalshi is challenging what it characterized in the suit as “an intrusion into the federal government’s exclusive authority to regulate derivatives trading on exchanges overseen by the Commodity Futures Trading Commission.”
The complaint filed in U.S. District Court says Kalshi expects Gov. Spencer Cox and Utah Attorney General Derek Brown “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.”
In response to Commodity Futures Trading Commission Chair Mike Selig’s announcement last week that the CFTC intends to “defend its exclusive jurisdiction over these derivative markets,” Cox vowed in a post on X that he would fight to block prediction markets while calling them “gambling,” which is illegal in Utah under the state’s constitution.
“These prediction markets you are breathlessly defending are gambling — pure and simple,” Cox wrote in the post. “They are destroying the lives of families and countless Americans, especially young men. They have no place in Utah.”
The governor added: “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.”
Kalshi’s lawsuit cites that post from the governor, as well as an op-ed by Brown published in the Deseret News on Sunday, in which Brown explained why he joined Connecticut Attorney General William Tong, a Democrat, “in urging Congress to address offshore gambling operations that disregard state law and target young Americans.”
Mike, I appreciate you attempting this with a straight face, but I don’t remember the CFTC having authority over the “derivative market” of LeBron James rebounds. These prediction markets you are breathlessly defending are gambling—pure and simple. They are destroying the lives… https://t.co/Ohup2x3D8u
— Governor Cox (@GovCox) February 17, 2026
“I was recently asked whether I plan to do anything about the rapid rise of prediction market apps that are now operating in Utah,” Brown wrote. “My response? You can bet on it.”
Meanwhile Utah lawmakers are advancing HB243, sponsored by Rep. Joseph Elison, R-Toquerville, which defines proposition betting as a “gambling bet on an individual action, statistic, occurence, or non-occurence.” Earlier this month the House passed the bill on a 63-9 vote, and last week it won a favorable recommendation from a Senate committee. The bill now goes to the full Senate for further consideration.
Kalshi’s lawsuit notes that “violations of Utah’s anti-gambling laws constitute felonies and misdemeanors.” But it also says “significantly, Utah law exempts ‘lawful business transaction[s]’ — such as transactions executed on a federally registered DCM — from its definition of gambling.” A Designated Contract Market is an exchange approved by the CFTC.
“But this is a fact that the governor and state officials appear to disregard in their statements,” the lawsuit says. “The CFTC has, in an exercise of its exclusive jurisdiction, permitted Kalshi to offer event contracts for trade on its exchange, including its sports-event contracts, which the CFTC views as falling ‘comfortably within’ the CEA,” referring to the Commodities Exchange Act, “and under its own regulatory authority.”
Kalshi said in its filing that it “now understands” that Utah state leaders intend to “take action against Kalshi, which the Governor incorrectly views as ‘illegal in Utah.’”
The company also said in its filing that it has made “good-faith efforts to engage Utah in dialogue,” but Brown hasn’t responded to recent requests to talk.
“The lack of response, combined with the clear threat included in the Governor’s multiple public statements, has led Kalshi to believe that an enforcement action in Utah is imminent,” the filing says.
Cox, in another social media post, said “rebranding betting as a financial product doesn’t reduce the harm it causes, especially for young men.”
“We’re ready to defend our laws in court and protect Utahns from companies that drive addiction, isolation, and serious financial harm,” he said.
One of Utah’s U.S. senators, Sen. John Curtis, backed Cox up in a post of his own.
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“Let’s call a spade a spade: sports prediction markets are gambling and gambling is regulated by states, not the (CFTC),” Curtis wrote. “If I were the Commission, I wouldn’t bet against Utah. Some wagers just aren’t smart — and betting against Utah is one of them.”
Asked about the federal lawsuit during an availability with reporters on Tuesday, Senate President Stuart Adams said, “I’m standing with the governor on this.”
“I also believe in the 10th Amendment,” Adams said, pointing to the part of the Utah Constitution that bans gambling. “We’ll probably fight to protect our state rights.”
Senate Majority Assistant Whip Mike McKell, R-Spanish Fork, also threw his support behind the ban while joking that he’s “not going to disclose whether or not I have a Kalshi account.”
The Senate president concluded with a quip of his own.
“If I’m going to give my money to someone,” he said, “I’m going to give it to my grandkids rather than some Kalshi.”
