It has become a rarity to watch any stretch of television or online video content without being exposed to at least one ad touting the ease and convenience of online gambling. But as prediction markets like Kalshi and Polymarket vie for dominance in the growing field of online betting, one place has emerged as a thorny challenge to their spread: Utah.
With its long history of deep Mormon conservatism, this traditionally red state is now a local leader in bucking a MAGA-led movement to facilitate e-gambling’s growth. But with Utah’s Republican governor leading an effort to regulate digital prop-betting on sports, some of the biggest names in app-based betting are fighting back, setting up a legal battle with hundreds of years of cultural history behind it.
Federal regulators face an ‘onslaught’ of state challenges
The proliferation of online prediction marketplaces with “no state oversight” operating “even in states that ban gambling” has raised “bipartisan alarms, especially related to sports gambling,” said Stateline. The Commodity Futures Trading Commission (CFTC), led by Trump appointee Mike Selig, filed an amicus brief claiming his group has total authority to regulate prediction markets against the “onslaught” of state challenges. “To those who seek to challenge our authority in this space, let me be clear. We will see you in court,” said Selig, currently the sole member of the five-seat body, in a brief video statement.
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Prediction market operators like Polymarket and Kalshi argue that their platform for making proposition bets on “specific in-game events rather than final outcomes” places their work in the realm of “federally regulated derivatives rather than gambling products,” said Financial Feeds. In late February, Kalshi fired a “pre-emptive strike over predictive markets” by suing Utah’s Republican Gov. Spencer Cox. The lawsuit claimed Kalshi feared the state would “imminently bring an enforcement action” barring the company from “offering event contracts for trading on its federally regulated exchange,” said Fox13. Despite Utah’s constitutional ban on gambling, Kalshi, in its suit, said its prob-bet contracts are “subject to exclusive federal oversight, and — critically — they are lawful under federal law.”
‘Destroying the lives of families and countless Americans’
Cox’s conflict with prediction markets comes amid a larger debate among regulators and lawmakers about “whether those markets constitute finance or gambling,” said The Associated Press. Utah, for its part, has “already made up its mind.” For more than a century, Utah has featured “no casinos, no lotteries and no racetracks that allow bets,” a prohibition “rooted in the conservative ideals of The Church of Jesus Christ of Latter-day Saints.” With Utah poised to enact legislation “intended to undercut prediction markets,” the move positions a conspicuously conservative state “not known for picking fights” on the “frontlines of a cultural, political and economic battle sweeping the country.”
The prediction markets Selig is “breathlessly defending are gambling — pure and simple,” said Cox in a video rebuttal to the CFTC. Prediction markets are “destroying the lives of families and countless Americans” and have “no place in Utah.”
Prediction market regulation is the “first major issue in which Cox has clashed with Trump” during his second term, the AP said. That’s not wholly unexpected, given the degree to which gambling “goes against a sense of work ethic, a kind of fair exchange” central to how many residents think about about themselves “in terms of Utah identity, and certainly Latter-day Saint identity and ethics,” said Patrick Mason, a Utah State University professor of Mormon history and culture, to the AP.
Although “real-money online casinos” remain illegal across Utah, various alternatives are being used “at a rate that surprises even industry analysts,” said the Standard Examiner. Sports betting may, for the time, remain banned, but analytics-minded residents turn to prediction markets to experience the “depth and excitement these analysis tools offer,” thereby “scratching that itch without crossing the line legally.” The pivot from cultural interest in brick-and-mortar casinos to digital betting alternatives “that feel more like Candy Crush than Caesars Palace” has helped “soften” resistance to online casino-style gaming, “even in a conservative state.”
To date, “different courts have ruled in different directions” on whether or not prediction markets constitute overt online gambling, said The Salt Lake City Tribune. With cases in the Third, Fourth, and Ninth Circuit Courts of Appeal, it’s likely that “we’re headed for the Supreme Court to decide this ultimately, but it’ll probably take years.”
