Better Markets urges Tenth Circuit to uphold Utah’s Kalshi gambling ruling

Better Markets has filed an amicus brief asking the U.S. Court of Appeals for the Tenth Circuit to uphold a ruling allowing Utah to enforce its gambling ban against Kalshi’s sports-event contracts. The filing supports Utah officials in KalshiEX LLC v. Cox, No. 26-4100, and asks the appeals court to affirm the district court’s decision.

The nonprofit argues that the contracts are sports gambling, rather than swaps subject to the Commodity Futures Trading Commission’s exclusive jurisdiction. “Calling a sports bet a ‘swap’ doesn’t make it one, no matter how many times Kalshi says it,” Dominick Freda of Better Markets said in announcing the Oct. 29 brief.

Its legal argument is that the Commodity Exchange Act does not expressly or implicitly preempt state gambling rules. Better Markets says the statute prohibits gaming contracts on derivatives markets, and that the CFTC’s past treatment and the legislative history of federal commodities law show that sports bets may not lawfully be listed or traded on designated contract markets.

The brief also contends that Congress, including through the 2010 Dodd-Frank Act, did not intend financial-market legislation to legalize sports betting nationwide. It argues that the CFTC lacks the authority, expertise and resources to regulate gambling, and that displacing Utah law would override the state’s choice to protect residents from sports-betting harms.

The appeal follows an August ruling by U.S. District Judge Robert J. Shelby granting Utah summary judgment. The court held that federal commodities law did not displace Utah’s authority to ban gambling, rejected Kalshi’s argument that its federally registered exchange prevented the state from treating the contracts as gambling, and found it implausible that Congress had silently overturned states’ traditional regulatory role. The Tenth Circuit denied Kalshi’s request to halt Utah’s enforcement while the appeal proceeds on Sept. 8.

The case sits within a broader split in appellate treatment of Kalshi’s contracts. Better Markets says the Sixth and Ninth Circuits have rejected Kalshi’s position. But the Third Circuit, in an April case involving New Jersey, upheld a preliminary injunction for Kalshi after finding it had a reasonable chance of showing that the Commodity Exchange Act preempted state law. That court held that the sports-related contracts were swaps traded on a CFTC-licensed designated contract market, where the agency had exclusive jurisdiction.

Better Markets says it has filed more than 130 comment letters with the CFTC, including on the definition of a swap, and has also submitted briefs and other materials addressing the event-contracts industry. Its filing states that it received no party funding for the brief and that no party’s counsel authored it.