A multibillion-dollar company. Criminal charges against its founders. The possibility of decades in prison. Adam Roarty’s latest Gaming America piece, which includes my perspective, captures the stakes of Utah’s fight with Kalshi.
For a business built around binary outcomes, the range of possible consequences is unusually stark. Behind the headlines, however, are questions we still cannot agree on: How does the law define gambling, and who gets to decide?
Utah adds two wrinkles: a final judgment on the merits against Kalshi, rather than just a preliminary-injunction ruling, and a state that prohibits gambling altogether.
The federal government has now stepped in directly. On October 29, the United States and the CFTC requested a temporary restraining order and preliminary injunction to halt Utah’s civil and criminal enforcement concerning event contracts on federally regulated exchanges. Their proposed order would require Utah to dismiss covered enforcement actions or seek stays. The request goes before Judge Robert Shelby–the same judge who entered the earlier judgment against Kalshi.
Five questions help put the dispute in context:
1. Why can’t Utah decide what gambling is for its citizens?
It can, when we’re talking about gambling games. Utah can prohibit casino gambling, and its constitution prevents the legislature from authorizing games of chance.
“But gambling is constitutionally banned in Utah.” Versions of this argument have been circulating on X. I understand our attention spans are limited, but if you’re going to make that claim, perhaps read the constitution first? The provision does not say “gambling.” Article VI, Section 27 says:
The Legislature shall not authorize any game of chance, lottery or gift enterprise under any pretense or for any purpose.
That wording matters. People can gamble through games or through event contracts. Authority over the former does not, by itself, settle authority over transactions that fall within federal derivatives law.
That does not mean an event contract is lawful simply because someone calls it a derivative. It means the legal inquiry cannot stop at the word “gambling.”
2. Didn’t Utah also have authority over sports gambling?
Sure. My argument is that Congress changed that boundary with the Commodity Futures Modernization Act of 2000 (“CFMA”).
The CFMA broadened the statutory framework to include event-based derivatives, repealed Section 5(g) of the Commodity Exchange Act, and introduced self-certification. Congress arguably restored a public-interest requirement for event contracts through Dodd-Frank. But the earlier changes matter when deciding whether a sports event contract falls within federal derivatives jurisdiction.
Congress did not need to write “sports is now a commodity under federal jurisdiction” to bring sports event contracts within that framework. We can argue that it should have been more explicit, but the absence of those words is not enough to settle the dispute.
3. But nobody noticed?
What makes you think nobody noticed?
If I told you nobody in my town was over seven feet tall, finding one person would disprove my claim. You would not need a census.
People noticed. I was one of them. I put the issue before the Supreme Court in 2013 and again in 2017. The Court did not resolve it. But I was reading, analyzing, and connecting dots that were already in the record.
Tom Bell explored the gambling–futures boundary in 2002. The CFTC confronted concerns about sports-contracts in its 2004 HedgeStreet designation memorandum. Paul Architzel wrote about event markets in 2006, Michael Philipp examined excluded commodities in 2007 and the CFTC then examined event contracts more broadly in its 2008 concept release.
These sources did not all necessarily reach the same conclusions, and some did not reach any, but that is not the point. The questions were being asked.
You can examine that record and still conclude that sports gambling belongs to the states. Fine. What you cannot reasonably conclude is that nobody raised the issue.
What changed was its commercial significance.
4. Wait. I thought this was about swaps and Dodd-Frank in 2010. Are you saying the issue predates that?
Yes. That is exactly what I am saying. Swaps and Dodd-Frank dominate the discussion because they are central to the litigation. But if we want to understand when the shift concerning sports event contracts occurred, my answer is 2000, not 2010.
For the Friends fans out there, I have previously used the Ross–Russ parallel to explain two statutory routes that lead to the same jurisdictional result. One proceeds through futures; the other through swaps. Focusing on one does not make the other disappear:
You can argue there was never a “sea change.” But if there was one, I don’t see how we can pinpoint it to 2010 and simply overlook 2000.
That raises a broader question: What counts as a sea change?
5. Even if people noticed, wasn’t this a sea change?
I would locate the larger structural shifts in 1922, when the Grain Futures Act established federal oversight of grain futures, and 1974, when Congress broadened the framework beyond enumerated agricultural commodities to encompass financial futures.
Later extensions matter. But adding another agricultural commodity was not the same kind of change as moving beyond agriculture altogether. Likewise, extending an already broad financial framework to event contracts need not be treated as an inexplicable break with the past.
The CFMA’s changes were consequential. Whether they were desirable, or whether Congress created tension with other federal prohibitions, are debates worth having.
But giving the CFTC jurisdiction is not the same as legalizing every product. A transaction can fall within a regulator’s jurisdiction and still be prohibited under the laws that regulator administers—or face an independent federal prohibition.
Utah’s criminal charges raise the stakes. They do not collapse those separate questions into one.
Before we can agree on what should be allowed, we need to understand what Congress changed, when it changed it, and whom it authorized to decide.
Related discussion: 🎙️ [Utah Draws the Line. But Where? — LexBeyond, Episode 32]
