Kalshi has experienced a setback in its ongoing legal battles as the Tenth Circuit Court of Appeals in Utah denied the company's request for emergency relief. The court, based in Denver, concluded that Kalshi did not fulfill the necessary criteria for an injunction pending appeal. To qualify for this emergency relief, Kalshi needed to prove a likelihood of winning the case, potential for irreparable harm, minimal harm to opposing parties, and consideration of public interest.
This request for an injunction came after a lower court allowed Utah to apply its anti-gambling regulations against the prediction market while the legal proceedings continue. The office of Attorney General Derek Brown expressed satisfaction with the court's decision, although it did not clarify whether enforcement actions against Kalshi and similar prediction markets would be initiated.
The primary concern in this case is the classification of Kalshi's sports-event contracts. The debate centers on whether these contracts constitute gambling under Utah law or if they fall under financial products regulated solely by federal Commodities law, overseen by the Commodity Futures Trading Commission.
Utah is known for having some of the nation's toughest anti-gambling laws, explicitly prohibiting gambling as detailed in the state Constitution. The recent ruling adds to the mounting legal challenges faced by firms operating prediction markets and offering sports contracts.
In a related legal development, Michigan has issued a second preliminary injunction against Kalshi, prohibiting the company from offering sports contracts within the state. This injunction imposes a geofence around Michigan, with potential fines reaching up to $500,000 for non-compliance. Additionally, Nevada's Ninth Circuit Court ruled on August 28 that the state could uphold its gambling regulations against Kalshi's sports-event contracts.
