Kalshi has experienced a setback as the Tenth Circuit Court of Appeals in Utah denied its request for emergency relief. The Denver-based court concluded that Kalshi failed to meet the criteria necessary for an injunction during its appeal. To qualify for such relief, Kalshi needed to prove a likelihood of success on the merits, the potential for irreparable harm, minimal harm to the opposing party, and that the public interest would be served.
The request for an injunction followed a ruling by a lower court that allowed Utah to implement its anti-gambling regulations against Kalshi while legal proceedings continue. This decision has been welcomed by Attorney General Derek Brown's office, although they did not specify whether they would proceed with the enforcement against Kalshi and similar prediction markets.
The central issue revolves around whether the sports-event contracts offered by Kalshi classify as gambling under Utah law or as financial products regulated solely by federal law, specifically by the Commodity Futures Trading Commission.
Utah stands out as one of the states with the most stringent anti-gambling laws, with prohibitions against gambling enshrined in its Constitution. The recent ruling further amplifies the legal challenges faced by companies operating in the prediction market space.
Kalshi has also been hit with another preliminary injunction from Michigan, marking the second such ruling against the company for offering sports contracts within the state. This injunction mandates that Kalshi geofence Michigan and imposes potential penalties of up to $500,000 for any violations. In a related development, the Ninth Circuit Court confirmed on August 28th that Nevada is permitted to enforce its gambling regulations against Kalshi's sports event contracts.
