Judge declines to pause Utah's prop betting law, pending appeal

KEY TAKEAWAYS

A federal appeals court denied Kalshi's request to temporarily block Utah's prop betting law.
Kalshi argued for an injunction, citing potential harm, but judges disagreed in a ruling Tuesday.
Utah can enforce its ban while Kalshi's appeal against the ruling proceeds.

SALT LAKE CITY — A federal appeals court declined to temporarily block a Utah law banning proposition betting, pending the outcome of an appeal brought by one of the nation's largest prediction market companies.

KalshiEX LLC, or just Kalshi, sued Utah and several top officials early this year over what was then a proposed law to ban proposition betting, or placing bets on specific players or events during games. Utah's constitution prohibits gambling, but Kalshi allows users to buy what it calls "event contracts" that pay out if a user picks correctly.

The company has been regulated by the Commodity Futures Trading Commission and argued in federal court that its markets are not subject to state-level gaming restrictions.

U.S. District Judge Robert Shelby sided with the state Legislature last month, ruling that a federal law regulating commodities trading doesn't override the state gambling ban. Kalshi quickly signaled it would appeal the ruling, and asked the U.S. Court of Appeals for the Tenth Circuit for an emergency injunction to block Utah's prop betting law while the case plays out.

"Defendants have threatened to prosecute KalshiEX LLC under Utah law for offering contracts subject to the 'exclusive jurisdiction' of the Commodity Futures Trading Commission," the company argued in court filings last month. "Kalshi thus faces an imminent risk of civil or even criminal enforcement under preempted state laws."

The company argued that it is entitled to a temporary restraining order because it could face irreparable harm if Utah's law takes effect.

In response, Utah claimed that Kalshi was not likely to succeed in overturning the lower court's ruling on appeal and that "Kalshi also fails to show that it will suffer irreparable harm without an injunction."

A pair of appellate judges sided against Kalshi and denied its request for an emergency injunction on Tuesday, writing that the company "has not shown these factors weigh in its favor."

A spokesperson for Kalshi did not immediately respond to a request for comment.

The ruling allows Utah to enforce its ban while the case continues.

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