A U.S. District Court has handed Utah a major victory in its battle to enforce its constitutional ban on gambling.
When the Utah Legislature passed HB243 during its 2026 general session, it sought to clarify the definition of gambling — specifically whether “proposition” betting as facilitated by Internet prediction platforms like Kalshi violates Utah law. The law, signed by Gov. Spencer Cox and taking effect May 6, aligned proposition betting directly with Utah’s constitutional ban on gambling, classifying online betting operations as a felony under state code.
Kalshi didn’t like the state’s interpretation of what it does and sued to be able to operate in Utah. The online operator claimed its activities fell under federal statutes and Utah shouldn’t be allowed to ban its operation in the state.
U.S. District Judge Robert Shelby rejected Kalshi’s request to block the Utah restrictions on Aug. 4, saying the federal law that Kalshi cited in its argument does not prevent the state from enforcing its laws, including the newly interpreted ban on “prop” bets via the Internet.
Proposition betting, as conducted by prediction markets like Kalshi and Polymarket, involves trading financial event contracts on specific, narrow outcomes — such as whether a player will hit a statistical milestone; an FDA drug approval will pass; or an economic metric, such as unemployment, will rise or fall. Instead of betting against a casino “house,” users buy and sell yes/no contracts peer-to-peer where prices reflect real-time collective probabilities. The practice is regulated federally by the Commodity Futures Trading Commission (CFTC) as a designated contract market rather than state-governed gaming commissions, an interpretation that the court ruling overturns.
Utah has been in the forefront of the argument between states and the federal government over who regulates the markets and whether they should be considered financial transactions or gambling. The legal landscape is divided, with state and federal courts blocking restrictions in several states and allowing them in others.
Kalshi is still available for placing bets in Utah, but in a statement, Attorney General Derek Brown said he intends to enforce the law on Kalshi but is exploring the state’s options.
“Gambling is gambling, no matter what any company calls it,” Brown said.
Kalshi also issued a statement, saying it disagrees with the court ruling and is preparing an appeal. The company maintains that prediction markets fall exclusively under federal jurisdiction and are not governed by the current hodge-podge of state gambling laws. The feds, through the CFTC, have generally agreed and defended prediction markets in court.
Courts in Maryland, Nevada, Ohio, New York and Wisconsin have ruled against Kalshi in similar lawsuits, while judges in New Jersey, Tennessee, Arizona and Minnesota have taken Kalshi’s side in court. Other states have been allowed to prohibit certain aspects of Kalshi’s operations without banning them entirely.
According to the Associated Press, the Trump administration has been supportive of prediction markets. The president's eldest son is an advisor for both Kalshi and Polymarket, and his venture capital firm is an investor in Polymarket. The president’s social media platform, Truth Social, has announced plans to launch a cryptocurrency-based prediction market called Truth Predict.
Gov. Spencer Cox has opposed prop betting, saying that prediction markets are “causing tremendous harm to countless American families.”
