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The prediction market Kalshi on Monday sued authorities in Utah, including that state's Governor Spencer Cox and Attorney General Derek Brown, in an effort to stop them from shutting down their trading platform in the state.
The lawsuit was filed in the U.S. District Court for the District of Utah. It claims that authorities in Utah are planning to ban the prediction market for violating gambling bans, and calls on a judge to issue an injunction to prevent them from doing so.
The suit comes just days after Cox responded to the newly appointed chairman of the Commodity Futures Trading Commission throwing his full support behind Kalshi and its competitors.
Chairman Michael Selig said last week: “The CFTC will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products.”
“Look, this is a joke, and I can’t believe he tried to say this with a straight face,” Cox said in response to Selig's comments.
“I’m concerned about these new technologies, and what they’re doing to our kids,” Cox added. “It’s one thing if we’re fighting China, and you’re developing your model. But once you start selling sexualized chat bots to kids in my state, now I have a problem with that, and I’m going to get involved there, and the Supreme Court is going to back me up.”
Utah does not allow any form of gambling, including a state lottery.
Kalshi’s CEO Tarek Mansour has argued publicly about the legality of prediction markets and operating nationwide across the United States, claiming the sector does not offer traditional gambling but instead provides trading on event contracts that specifically fall under the oversight of the Commodity Futures Trading Commission (CFTC).
Utah is the first state Kalshi has sued that does not regulate sports wagering.
Kalshi's llawsuits have been met with mixed results thus far. They have previously sued Nevada, New Jersey, Maryland, Tennessee, New York, Ohio, and Connecticut. The district courts appear to be split on the merits of the lawsuits with Kalshi declaring wins in New Jersey and Tennessee, where the company won an injunction.
In Maryland, Kalshi was not granted an injunction while, in Nevada, an initial injunction was dissolved. Kalshi is also being sued in state court in Massachusetts and in federal court by tribes in California and Wisconsin.
“Utah’s stated intent to prohibit Kalshi from operating is a form of regulation that intrudes upon the federal regulatory framework that Congress established for regulating derivatives on designated exchanges,” Kalshi’s lawyers argued.
They added, “Since those statements, Defendants have not engaged with Kalshi to provide any assurances about whether they will enforce those laws against it.”
Chris Costigan, Gambling911.com Publisher
