Kalshi has taken legal action against Utah’s top officials, filing a lawsuit in federal court that accuses them of attempts to obstruct its prediction market operations in the state.

The lawsuit, filed on February 23 in the U.S. District Court for Utah, claims that Governor Spencer Cox and Attorney General Derek Brown are preparing to classify its event contracts as illegal gambling.

Kalshi is seeking intervention from the court to secure declaratory and injunctive relief before any enforcement measures are enacted, arguing that the mere threat of such actions is jeopardizing its business. At the heart of the dispute is the question of who holds the authority over Kalshi’s business framework.

Kalshi contends that it operates under federal regulation and that any effort by Utah to impede its operations would violate the Supremacy Clause of the U.S. Constitution. According to Kalshi, the Commodity Futures Trading Commission (CFTC) has been granted exclusive rights by Congress to oversee derivatives trading on federally sanctioned exchanges.

The lawsuit cites remarks made by Governor Cox that highlight the state’s stance. In a February news report, he stated, “I think you’re going to see 50 states suing these guys in one way or another. It’s illegal in Utah and will continue to be so.”

Additionally, the lawsuit points out Cox’s response on social media following CFTC Chairman Mike Selig’s assertion of the agency’s exclusive jurisdiction over derivative markets. Cox committed to leveraging “every resource within [his] disposal as governor of the sovereign state of Utah” to contest that position.