Securities Regulation Daily Wrap Up, FEDERAL PREEMPTION—10th Cir.: Tenth Circuit denies Kalshi’s emergency motion for injunction pending appeal, (Sep 9, 2026)

By Rebecca E. Hoffman, J.D.

An injunction would have permitted KalshiEX to continue offering sports event contracts, avoiding what it argued would be irreparable harm from unwinding open positions.

In a brief per curiam order, the Tenth Circuit denied designated contract market (DCM) KalshiEX LLC’s emergency motion for preliminary injunction pending appeal of the decision below granting summary judgment in favor of Utah state officials, who seek to enforce the state’s anti-gambling laws against Kalshi’s sports-related prediction market business in the state. The district court determined that the CFTC’s “exclusive jurisdiction” over swaps (per the Commodity Exchange Act (CEA) as amended by the Dodd-Frank Act) does not preempt Utah’s gambling restrictions (KalshiEX LLC v. Cox, No. 26-4100 (10th Cir. Sept. 8, 2026)).

Kalshi sued the state of Utah in February, seeking a declaration that the CEA preempts any Utah law that interferes with the CFTC’s exclusive authority to regulate the contracts at issue. The DCM moved for a preliminary injunction, and the Utah defendants filed for dismissal or summary judgment. The district court ruled in favor of the state, and Kalshi appealed. “But nothing prevents Defendants from enforcing Utah’s gambling laws against Kalshi pending appeal,” the DCM argued in its August 11 emergency motion. “This case cries out for relief,” Kalshi said, but the Tenth Circuit disagreed.

Exclusive jurisdiction. Kalshi explained in its motion that the CEA originally did not preempt state law, but amendments in 1974 created the CFTC, and granted that body “exclusive jurisdiction” over swaps trading on DCMs, defining “swap” such that it encompasses event contracts. Kalshi quoted the Third Circuit, which upheld an injunction in favor of the DCM, finding that “‘[s]tates cannot invade the CFTC’s exclusive jurisdiction … by re-characterizing swaps trading on DCMs as illegal gambling.’”

The CEA’s plain text, in 7 U.S.C. §2(a)(1)(A), gives the CFTC “exclusive jurisdiction” over “transactions involving swaps or contracts of sale of a commodity for future delivery … traded or executed on a contract market designated pursuant to section 7 of this title.” Kalshi argued that earlier provisions preserved state laws that might apply, but these provisions were dropped, purportedly to make sure the CFTC was the sole regulator of event contracts. Kalshi maintained that field preemption and conflict preemption could be substantiated here as well.

Kalshi claimed that the district court misread the additional language in Section 2(a)(1)(A) as setting forth exceptions to the CFTC’s exclusivity that apply here. For example, it reads: “[e]xcept as hereinabove provided, nothing contained in this section shall … supersede or limit the jurisdiction at any time conferred on … other regulatory authorities under the laws of the United States or of any State.” Kalshi explained that this means the grant of exclusive jurisdiction supersedes states from regulating on-DCM transactions, and off-exchange trading is a clear exception.

NPRM. The motion also pointed out that the CFTC published a Notice of Proposed Rulemaking seeking comment on a framework for assessing whether an event contract involves activities deemed to be against the public interest, and for determining whether such contracts are, in fact, contrary to the public interest and should be eliminated from trading. This proposal arose from the CEA’s “Special Rule,” which, as Kalshi put it, “provides that the CFTC alone ‘may’ prohibit contracts involving ‘gaming’ if it determines they are contrary to the public interest.”

Kalshi argued that permitting state laws to supersede the CFTC’s exclusive jurisdiction would subject its event contracts to a multitude of state regimes, and that the NPRM observes that the CEA was designed to avoid this.

Circuit split. “The decision below breaks from the only merits decision from any court of appeals resolving these issues,” Kalshi’s motion said. This is no longer true, however. On August 28, the Ninth Circuit ruled against Kalshi in its challenge to Nevada’s enforcement of state gaming laws against sports-related prediction markets, finding that the CEA likely did not preempt Nevada laws because Kalshi’s event contracts are not “swaps,” and that the CEA has not preempted the field of “gaming” activity. Since that ruling, the state of New Jersey has filed a petition for certiorari asking the Supreme Court to resolve the circuit split.

According to Kalshi, irreparable harm will ensue without an injunction. Complying with Utah’s ban will hurt Kalshi financially, it said, and refusing to comply with Utah’s gambling laws could result in criminal prosecution. Further, federal law requires that DCMs provide “impartial access” to all eligible participants nationwide, and Utah’s enforcement renders Kalshi incapable of fulfilling this mandate.

“If Utah were to secure a judgment in state court,” Kalshi argued, “that could raise nettlesome jurisdictional complications if Kalshi later prevails before this Court, further underscoring the need to maintain the status quo.”

Kalshi also asserted that Utah allowed event contract activity in the state for a year before it threatened legal action, indicating that the state’s interests are outweighed by “the public interest in preventing enforcement of preempted law while the Court considers Kalshi’s appeal.”

The case is No. 26-4100.

Attorneys: Davis Benjamin Campbell (Milbank LLP) for KalshiEX LLC. Joshua Cutler, Office of the Attorney General, for Spencer J. Cox.

Companies: KalshiEX LLC

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