Major Sportsbook Operators Restrict Prediction Market Access in Utah After Kalshi Criminal Charges
DraftKings, FanDuel, and Fanatics have restricted or eliminated prediction market offerings in Utah following criminal charges against Kalshi and its co-founders. Responses varied by platform, but all cited recent legal developments. The CFTC lawsuit and multi-state amicus brief highlight a deepening federal-state jurisdictional dispute.
SCCG Take — Operators are demonstrating caution by limiting exposure in strict states, but fragmented regulation slows sector expansion. Supreme Court review is required to establish clear boundaries between commodities and gambling oversight.
Utah Attorney General Derek Brown’s criminal charges against prediction market operator Kalshi have prompted DraftKings, FanDuel, and Fanatics to restrict event contract offerings in the state. The platforms acted within days of the filing, demonstrating immediate sensitivity to state enforcement. These steps occur as the Commodity Futures Trading Commission challenges Utah’s authority, setting up a direct federal-state conflict over jurisdiction.
Platform Responses Show Varied Approaches to State Pressure
DraftKings acted on October 28 by suspending sports, political, and novelty contracts for Utah customers while continuing to allow financial event contracts tied to stocks, commodities, and cryptocurrency. Existing positions in restricted categories will settle according to schedule. FanDuel followed on Friday with parallel limits, preserving access to economic benchmarks and key financial indicators.
Fanatics chose the widest scope, halting all trade placement on its platform in Utah effective November 4. Attorney General Brown welcomed the pullbacks. He posted on X: “Gambling is illegal in Utah, whether you place the bet, run the game, or promote it. Calling it a ‘prediction market’ doesn’t change what it is, and being federally registered doesn’t put a company above the law.”
The decisions followed an undercover investigation in which an investigator using a Utah-based IP address placed 12 sports event contracts involving NFL, MLB, MLS, NHL, and NCAA events between September 13 and September 26. Kalshi co-founders Tarek Mansour and Luana Lopes Lara each face 14 counts, including one second-degree felony for a pattern of unlawful activity and 12 third-degree felonies tied to online gambling promotion.
Unresolved Federal-State Conflict Creates Operator Exposure
The CFTC filed suit asserting exclusive jurisdiction under the Commodity Exchange Act, arguing state gambling restrictions cannot override federal rules for these contracts. CFTC Chair Michael Selig indicated the agency may pursue the matter to the US Supreme Court. A bipartisan coalition of 37 states and Washington, D.C. filed an amicus brief in the 10th US Circuit Court of Appeals supporting Utah and an August ruling by US District Judge Robert Shelby that rejected Kalshi’s preemption claims.
Utah is one of only two states without legalized gambling, which sharpens the enforcement edge. Appeals courts have issued conflicting decisions on similar challenges, leaving operators exposed to selective prosecution. According to World Casino News, the pattern repeats in more than a dozen states. Prediction market platforms must therefore weigh federal registration against the practical risk of state criminal action until definitive judicial boundaries are drawn. Sustained growth in sports-related event contracts will likely remain constrained in restrictive jurisdictions absent clearer national rules.
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