ORDER
Case No. 2:26-cv-00151-RJS-CMR District Judge Robert J. Shelby Chief Magistrate Cecilia M. Romero Online prediction platforms have in recent years begun using a financial trading tool to facilitate trading on the outcome of sporting events.1States around the country have challenged this practice as a form of sports betting prohibited by various State gambling laws.2Plaintiff
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Kalshi LLC preemptively seeks a declaration that Utah may not enforce its anti-gambling laws against it.3Now pending before the court are two motions on this issue: a motion for a preliminary injunction4and a motion for summary judgment.5As explained below, the court concludes the federal law relied upon by Kalshi does not preempt Utah's ability to enforce its anti-gambling laws. Defendants are entitled to summary judgment on Kalshi's claim. Kalshi's motion for a preliminary injunction is denied.
BACKGROUND
A. The Commodity Exchange Act
In 1936, Congress passed the Commodity Exchange Act (CEA) "to regulate futures contracts in agricultural commodities."6Futures contracts enable parties to allocate financial risk. For example, farmers allocate risk to account for fluctuations in market prices for crops.7 Futures contracts are "derivatives"—"a financial contract whose value is derived from the performance of underlying market factors."8Although futures contracts began in the agricultural sector, the CEA has expanded derivative trading to many types of commodities.9 In 1974, Congress passed the Commodity Futures Trading Commission Act (CFTCA).10
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The CFTCA established the Commodity Futures Trading Commission (CFTC) to oversee and regulate derivative markets under the CEA.11Section 5 of the CEA states the purposes of the Act: (1) "to serve the public interests . . . through a system of effective self-regulation of trading facilities, clearing systems, market participants and market professionals under the oversight of the [CFTC]"; (2) "deter and prevent price manipulation or any other disruptions to market integrity"; (3) "ensure the financial integrity of all transactions subject to the [CEA] and [avoid systemic risk]"; (4) "protect all market participants from fraudulent or other abusive sales practices and misuses of customer assets"; and (5) "promote responsible innovation and fair competition among boards of trade, other markets and market participants."12 The CEA definition of "commodity" includes common agricultural products, both consumable and non-consumable, and "all services, rights, and interests . . . in which contracts for future delivery are presently or in the future dealt in."13However, under the CFTCA, the CFTC lacked the authority to regulate "swaps"—a financial tool "that provides for any purchase, sale, payment, or delivery . . . that is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence."14"Contrary to futures and traditional options, which contemplate delivery of or a performance related to a commodity at some future time, swaps are pure financial instruments based on the difference between two fluctuating values."15
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Swaps include "event contracts"—contracts "for which the 'payoff is based on a specified event, occurrence, or value'" that enable businesses and individuals "to hedge against economic risk."16Generally, the return on event contracts turns on the outcome of an event, for example, whether a crop is destroyed by a storm or an earthquake occurs in a certain city on a certain date.17Swaps are bought, sold, and traded on federally regulated exchanges known as
"Designated Contract Markets" (DCMs).18 Trading in swaps greatly expanded in the early 2000s and is believed to be a causal factor of the 2008 financial crisis.19In response to this crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) which, among other things, expanded the CEA's authority to regulate swaps.20Significant here, under 7 U.S.C. § 2, the CEA provides "[t]he [CFTC] shall have exclusive jurisdiction . . . with respect to . . . transactions involving swaps . . . traded or executed on a [DCM]."21Section 2 further provides that the CFTC's jurisdiction does not "supersede or limit the jurisdiction" of the Securities and Exchange Commission (SEC) from "carrying out [its] duties and responsibilities," or "supersede or limit the jurisdiction conferred on courts of the United States or any State."22This latter provision of § 2 is often referred to as "the savings clause."23
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The CEA also specifies that 7 U.S.C. § 16(e)(2) applies to swaps.24Section 16(e)(2) sets out the relationship between the CEA and "other law, departments, or agencies," and states:
This chapter shall supersede and preempt the application of any State or local law that prohibits or regulates gaming or the operation of bucket shops (other than antifraud provisions of general applicability) in the case of—
(A) an electronic trading facility excluded under section 2(e) of this title; and
(B) an agreement, contract, or transaction that is excluded from this chapter under [sections governing transactions in foreign currency and government securities, hybrid instruments, or banking products] or exempted under [the section governing public interest exemptions] (regardless of whether any such agreement, contract, or transaction is otherwise subject to this chapter).25 In other words, § 16(e)(2) provides the CEA preempts only State gaming laws that govern certain swaps that occur off DCMs26and other designated swaps27not applicable here. The CEA allows for DCMs to self-certify to the CFTC that its contracts comply with the CEA.28It also contains a "Special Rule" that authorizes the CFTC to review and prohibit certain
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event contracts if it determines the transaction involves gaming or an activity that is unlawful under State law.29
B. Utah Law
Utah's criminal code includes a chapter governing gambling.30Utah's code defines gambling as
risking anything of value for a return or risking anything of value upon the outcome of a contest, game, gaming scheme, or gaming device when the return or outcome:
(i) is based on an element of chance, regardless of:
(A) the existence of a preview or pre-reveal feature in the device, contest, or game; or
(B) whether the preview or pre-reveal feature . . . allows users to see individual or successive outcomes; and
(ii) is in accord with an agreement or understanding that someone will receive anything of value in the event of a certain outcome.31 Under Utah law, gambling includes lotteries and "proposition bets"—bets "on individual action, statistic, occurrence, or non-occurrence."32But "lawful business transactions" are not in the gambling ambit.33
Any individual or entity that "intentionally provides or offers to provide a form of online gambling" to anyone in the state of Utah is guilty of a third-degree felony,34and an entity that
"induces or aids another individual to engage in gambling" and "derives, or intends to derive, an
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economic benefit other than personal winnings from gambling" is subject to an enhanceable class A misdemeanor.35
C. Kalshi
Kalshi is a DCM that offers event contracts.36In January 2025, Kalshi began offering event contracts on the outcome of sports events.37For example, Kalshi offers event contracts involving the "greatest seeding upset margin" in a sporting competition,38which sports team will have the longest losing streak in a season,39whether a certain team will win a sporting event by a particular margin,40whether a specific team or player will score a designated touchdown within a certain time period of a specified game,41and who will sing at the Super Bowl.42At oral argument, the court asked Kalshi whether there is any limiting principle on the type of event or occurrence that could be designated as an event contract; for example, could the sale of a vehicle between private parties or the outcome of an abduction be designated as an event contract?43 Kalshi responded only that it would not offer such a contract and did not identify any restraints other than the CFTC's ability to define swaps and review derivative contracts.44
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In February 2026, the current CFTC Chairman made an announcement on X45that the CFTC intended to defend its jurisdiction over derivative markets.46In response, Defendant Utah Governor Spencer J. Cox posted the following:
I don't remember the CFTC having authority over the "derivative market"
of LeBron James rebounds. These prediction markets you are breathlessly defending are gambling—pure and simple. They are destroying the lives of families and countless Americans, especially young men. They have no place in Utah.
Let me be clear, I will use every resource within my disposal as governor of the sovereign state of Utah, and under the Constitution of the United States to beat you in court.47
Two days later, Governor Cox posted the following: "Rebranding betting as a financial product doesn't reduce the harm it causes . . . . We're ready to defend our laws in court and protect Utahns from companies that drive addiction, isolation, and serious financial harm."48
PROCEDURAL HISTORY
Concerned that Utah intends to bring a criminal enforcement action against it to prohibit it from offering sporting event contracts, Kalshi filed the Complaint on February 23, 2026.49 Kalshi asserts one claim seeking declaratory judgment that, under the Supremacy Clause of the U.S. Constitution, the CEA preempts any Utah law that "effectively regulates" Kalshi's DCM.50 On April 24, 2026, Kalshi filed a motion for a preliminary injunction and temporary restraining
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order.51On May 1, 2026, Defendants filed a motion to dismiss or, in the alternative, a motion for summary judgment.52Additionally, 23 federally-recognized Indian tribes and Indian gaming associations moved for leave to file an amicus curiae brief.53All motions are fully briefed, and the court heard oral argument on June 25, 2026.54
LEGAL STANDARD
Under Federal Rule of Civil Procedure 8, a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief."55A defendant may move under Rule 12(b)(6) to dismiss a complaint for failure to meet this standard.56When considering a motion to dismiss, the court is generally limited to considering only the allegations in the complaint.57If "matters outside the pleadings are presented and not excluded by the court" on a Rule 12(b)(6) motion, "the motion must be treated as one for summary judgment."58 When converting a motion to dismiss to a motion for summary judgment, the parties must be given adequate notice and a reasonable opportunity to provide all pertinent materials to
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the court.59This standard is met here. Defendants titled their Motion as a "motion to dismiss or alternatively motion for summary judgment"60and the court considered matters outside of the pleadings presented by both parties.61Additionally, oral argument focused on the merits of Kalshi's claim, not the sufficiency of the Complaint.62Accordingly, the court considers the Defendants' Motion as a motion for summary judgment.
Summary judgment is appropriate if "there is no genuine dispute as to any material fact"
such that the moving party is "entitled to judgment as a matter of law."63When a party submits a properly supported motion for summary judgment, "the adverse party must set forth specific facts showing that there is a genuine issue for trial."64Summary judgment is appropriate when the nonmoving party fails to make a sufficient showing on an essential element of his or her prima facie case for which he or she has the burden of proof.65In ruling on a motion for summary judgment, courts "view the evidence and make all reasonable inferences in the light most favorable to the nonmoving party."66
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ANALYSIS
The Supremacy Clause of the U.S. Constitution provides that the Constitution and any federal law enacted pursuant thereof "shall be the supreme Law of the Land."67State statutes are presumed to be constitutional,68but federal law may preempt them.69"[T]he scope of a statute's pre-emptive effect is guided by the rule that 'the purpose of Congress is the ultimate touchstone' in every pre-emption case."70Courts assume "'the historic police powers of the States' are not superseded 'unless that was the clear and manifest purpose of Congress.'"71This is especially true in "area[s] traditionally occupied by the States."72"Matters left unaddressed in [a federal statutory] scheme are presumably left subject to the disposition provided by state law."73 Preemption may be express or implied.74Implied preemption takes two forms: (1) field preemption, and (2) conflict preemption.75Plaintiff contends both express and implied
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preemption apply here.76The court first addresses express preemption and then turns to implied preemption.77As explained below, the court concludes the CEA does not preempt Utah's anti- gambling laws under either theory.
I. Express Preemption
State laws are expressly preempted when they "fall[] within the scope of a federal preemption provision."78In determining whether Congress explicitly preempted state law, the
"ordinary principles of statutory interpretation" apply.79The court primarily discerns congressional intent from "the plain language of the federal statute"80and the "'statutory framework' surrounding it."81"[W]hen the text of a pre-emption clause is susceptible of more than one plausible reading, courts ordinarily 'accept the reading that disfavors pre-emption.'"82 Additionally, the scope of preemption is narrowly construed "'when Congress has legislated in a field traditionally occupied by the States.'"83
Kalshi argues the CEA's jurisdiction provision expressly preempts any application of Utah's anti-gambling laws as they relate to DCMs.84Specifically, it points to 7 U.S.C.
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§ 2(a)(1)(A) that provides the CFTC has "exclusive jurisdiction" for swaps traded or executed on DCMs.85
Defendants contend Kalshi reads the jurisdiction provision too broadly, and Kalshi's interpretation is inconsistent with other CEA provisions and leads to absurd results.86The court agrees with Defendants: § 2(a)(1)(A) does not expressly preempt Utah's enforcement of its anti- gambling laws.
While the CEA jurisdiction provision gives the CFTC exclusive jurisdiction over swaps traded on DCMs, the statute also curtails the CFTC's authority. Specifically, § 2(a)(1)(A) states the CFTC does not supersede or limit the SEC's regulatory authority, nor does it "supersede or limit the jurisdiction conferred on courts of the United States or any State."87On its face, this language strongly signals there is room for State regulation as it relates to the province of the
CEA.
Section 2(a)(1)(A) must also be interpreted in "context and with a view to [its] place in the overall statutory scheme."88"Congress' enactment of the Special Rule in 7 U.S.C. § 7a-2(c) demonstrates its intent that some state law and regulation should operate in tandem with the CEA."89The CEA also includes a section that applies to swaps90and outlines the CFTC's
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"[r]elation to other law, departments, [and] agencies."91Section 16(e)(2) provides the CEA
"supersede[s] and preempt[s] the application of any State or local law that prohibits or regulates gaming or the operation of bucket shops (other than antifraud provisions of general applicability) in the case of" (1) certain swaps that occur off DCMs;92and (2) contracts or transactions involving foreign currency, government securities, qualifying hybrid instruments, and certain banking products.93The language "in the case of" narrows the CFTC's preemption power.94 When transactions fall within these enumerated categories, State law is preempted by the CEA. But when a transaction falls outside of the categories, which is the case here, preemption does not apply.
Kalshi argues § 16(e)(2) is not applicable to its sporting event contracts because it pertains only to off-DCM transactions.95Kalshi contends Congress added § 16(e)(2) because
"§ 2(a)(1)(A)'s preemptive effect extended only to on-exchange transactions" and "additional legislation was needed to preempt certain off-exchange transactions."96But § 16(e)(2) does not
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include language confining its applicability to off-DCM swaps.97Had Congress wanted to confine its application, "Congress knew how to do so."98It did not. Indeed, the CEA jurisdiction provision itself states § 16(e)(2) applies to swaps generally.99Section 16(e)(2) then limits preemption to State gaming laws that govern certain swaps by that occur off DCMs100and other designated swaps101that do not include sporting event swaps. Because § 16(e)(2) confines preemption to only certain swaps not applicable here, the CEA does not preempt State gaming laws that occur on DCMs like Kalshi.
At minimum, there is "more than one plausible reading" of the CEA's jurisdictional provisions, and "courts ordinarily accept the reading that disfavors pre-emption."102 Accordingly, the court concludes the CEA does not expressly preempt the enforcement of Utah's anti-gambling laws.
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II. Implied Preemption
Even if not expressly preempted, federal law may still preempt a State law by implication. Where there is no express preemption, there is a strong presumption against preemption in "a field traditionally occupied by the States."103And Congress has stated, "States should have the primary responsibility for determining what forms of gambling may legally take place within their borders."104Even so, State law may still be preempted by implication if (1)
"federal law so thoroughly occupies a legislative field 'as to make reasonable the inference that Congress left no room for the States to supplement it,'"105or (2) the state law "actually conflicts with federal law."106The court addresses both forms of implied preemption in turn.
A. Field Preemption
Field preemption occurs when Congress determines a field "must be regulated by its exclusive governance."107Field preemption is rare.108Under this theory, State law is preempted if the "framework of regulation is so pervasive that Congress left no room for the States to supplement it."109The court may infer field preemption "where the field is one in which 'the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject.'"110
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"Undoubtedly, every subject that merits congressional legislation is, by definition, a subject of national concern. That cannot mean, however, that every federal statute ousts all related state law."111Further, fields related to "state police power regulations" are construed narrowly,112and, "[g]iven the presumption that state and local regulation related to matters of health and safety can normally coexist with federal regulations, [federal courts] will seldom infer, solely from the comprehensiveness of federal regulations, an intent to pre-empt in its entirety a field related to health and safety."113
The first step is to define the field.114Here, the parties focus on different fields. Kalshi focuses on trading on DCMs,115and Defendants primarily address the field of generally- applicable gambling laws.116But under either framing, the field is not preempted for two reasons.
First, the CEA includes the savings clause.117The Supreme Court has explained a savings clause "negates the inference that Congress 'left no room' for state causes of action."118
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Second, the CEA includes additional carve outs that permit State action.119And Kalshi concedes gambling is a field that has been "traditionally regulated by the states," not the federal government.120
The Supreme Court has stated that it is "quite sure the Government has a substantial interest in supporting the policy of [non-gambling] States, as well as not interfering with the policy of States that permit [gambling]."121Congress has attempted to support States in these efforts "since the early 19th century."122It is simply implausible that Congress would silently reverse course though an Act addressing the 2008 housing financial crisis.123 Given the CEA's framework and the history of State regulation of gambling, the court cannot conclude the CEA is so pervasive that there is no room for the State of Utah to supplement it.124
Co. v. Durham Cnty., N.C., 479 U.S. 130, 140 (1986) ("Chief among the indications of an intent to pre-empt is where Congress has legislated so comprehensively that it has no room for supplementary state legislation.").
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B. Conflict Preemption
Even absent express or field preemption, State law may still be "pre-empted if that law actually conflicts with federal law."125Conflict preemption occurs when "compliance with both federal and state regulations is a physical impossibility," or when "state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."126What constitutes "a sufficient obstacle is a matter of judgment, to be informed by examining the federal statute as a whole and identifying its purpose and intended effects . . . ."127The court addresses impossibility and then whether compliance frustrates the purposes of the CEA, concluding that Utah's enforcement of its anti-gambling laws is not conflict-preempted.
1. Compliance Is Not Impossible. Conflict preemption applies if it is impossible for Kalshi to comply with both the CEA and Utah's anti-gambling laws. Kalshi argues this is the case because Utah would require it to
"block the exchange solely from persons located in Utah" and the CFTC mandates a DCM
"provide its members, persons with trading privileges, and independent software vendors with impartial access to its markets and services."128Kalshi further contends that permitting state enforcement of gambling laws would thwart Congress' purpose to establish a "national market under a uniform set of regulations."129Defendants argue Kalshi "misconstrues the impartial-
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access requirement,"130and some State regulation does not obstruct the purposes of the CEA.131 The court agrees with Defendants.
A DCM must provide its members access that is "impartial, transparent, and applied in a non-discriminatory manner"; and members, traders, and software vendors must have
"[c]omparable fee structures" for "receiving equal access to, or services from" the DCM.132 CFTC commentary shows the impartial access requirement is meant to prevent DCMs from discriminating based on monetary resources. For example, 75 FR 80572 provides:
The purpose of the proposed impartial access requirements is to prevent DCMs from using discriminatory access requirements as a competitive tool against certain participants. Access to a DCM should be based on the financial and operational soundness of a participant, rather than discriminatory or other improper motives. Any participant should be able to demonstrate financial soundness either by showing that it is a clearing member of a DCO that clears products traded on that DCM or by showing that it has clearing arrangements in place with such a clearing member. Furthermore, granting impartial access to participants that satisfy a DCM's access requirements may enhance the DCM's liquidity and the overall transparency of the swaps and futures markets.133
The commentary also states, "[t]he [CFTC] believes that the requirement to provide impartial access requires DCMs to avoid the creation of exclusive membership standards that focus on high net worth."134
Kalshi argues the regulations and commentary that discuss access in the financial context are "stray reference[s]" that do not limit the impartial access requirement because the rule does
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"not specifically mention geographic discrimination."135And the court acknowledges that some courts have agreed that the impartial-access requirement encompasses geography.136 Nevertheless, the court is not persuaded. The CEA, regulatory rules, and CFTC commentary better align with a limited financial interpretation than a silent expansive geographical one. First, it is not "stray references" that place the impartial access mandate in the financial context.137It is the only context discussed. The language of the regulation includes a requirement for comparable fee structures and CFTC commentary states the purpose of the impartial access requirement is to prevent competition leverage, ensure financial soundness, and promote DCM liquidity and transparency.138The stated purpose does not suggest any discrimination beyond financial discrimination. Indeed, the CFTC contrasts discriminatory access with "financial and operational soundness."139This suggests the impartial access requirement is a rule for fair play, not one concerning who is allowed on what playground. Second, Kalshi has not demonstrated it would be impossible to comply with both Utah anti-gambling law and the CEA. Other than making conclusory statements that subjecting Kalshi to Utah law could eventually result in a "state-by-state patchwork" that "would make
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operating a DCM functionally impossible,"140Kalshi has not explained why or how it would be impossible to manage different State requirements.141Indeed, Kalshi's event contracts each contain an appendix of "Trading Prohibitions"—some of which are specific to individual groups of people.142Adding an additional category of prohibited participants in a sports-related event contract does not appear to be onerous. In short, Kalshi has not shown that compliance with both federal and state law is impossible.
Third, the CEA provides for some State regulation.143It would be inconsistent for Congress to allow States to regulate their gambling laws but to simultaneously require States to provide citizens access to every event contract, including those that constitute gambling under State law.144
2. Utah Law Does Not Frustrate the Purposes of the CEA Finally, Utah's anti-gambling laws may be preempted by implication if they "stand[] as an obstacle to the accomplishment and execution of the full purposes and objectives of" the CEA.145The CEA explains its purposes: (1) "to serve the public interests . . . through a system
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of effective self-regulation of trading facilities, clearing systems, market participants and market professionals under the oversight of the [CFTC]"; (2) "deter and prevent price manipulation or any other disruptions to market integrity"; (3) ensure the financial integrity of all transactions subject to the [CEA] and [avoid systemic risk]"; (4) "protect all market participants from fraudulent or other abusive sales practices and misuses of customer assets"; and (5) "promote responsible innovation and fair competition among boards of trade, other markets and market participants."146
Kalshi primarily argues the purpose of the CEA is to establish uniform federal oversight of DCMs and avoid "fragmented regulatory demands that could differ by jurisdiction."147Kalshi contends the CFTC has exclusive authority to prevent event contracts and any State-law enforcement conflicts with the CEA's federal scheme.148It maintains States may only "police those who offer fraudulent off-exchange investments" and "transactions outside those preserved exclusively for the jurisdiction of the CFTC"—contracts traded on DCMs.149 Defendants respond that Kalshi's "uniformity argument is undermined by the fact that Congress also made it illegal under Federal law to operate a business within a State in a manner that violates State gambling laws[,]" the CEA operates in a federal framework that recognizes gambling laws differ from State to State, and Kalshi misconstrues the statutory language that prescribes the CFTC's power.150
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The court agrees that enforcement of State gambling laws is not inconsistent with the CFTC's regulation and oversight of derivatives markets. Congress is aware that some States permit gambling while others do not,151and the CEA explicitly provides for State jurisdiction.152 Additionally, § 16(e)(2) explicitly provides for State regulation of its gaming laws in all but a few specified cases.153And, contrary to Kalshi's contention, the application of § 16(e)(2) is not limited to off-DCM transactions. Section 2(d) specifically states that § 16(e)(2) applies to swaps.154Section § 16(e)(2) makes clear that Congress intended States to have the power to regulate its swaps involving gaming except in certain specified situations. Further, State regulation of its gambling laws does not prevent the CFTC from serving the public interest in regulating derivates markets, preventing price manipulation, ensuring financial integrity, protecting market participants, and promoting innovations.155Kalshi has not met its burden of showing otherwise.156Accordingly, the court concludes State regulation of its gambling laws does not frustrate the CEA's purpose.
CONCLUSION
The court concludes the CEA does not preempt Utah's enforcement of its anti-gambling laws against Kalshi. Defendants' Motion for Summary Judgment is GRANTED.157The
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Plaintiff's Motion for a Preliminary Injunction158and the Motion to File Amici Curiae Brief159 are DENIED as moot. The Clerk of Court is directed to close the case.
SO ORDERED this 4th day of August 2026.
BY THE COURT:
____________________________
ROBERT J. SHELBY
United States District Judge