Share 
State of Play’s TL;DR
- Iowa can continue to regulate Kalshi under the state’s gambling law, a judge ruled.
- US District Judge Stephen Locher said the prediction market was unlikely to win its claim that federal law pre-empts state law.
A federal judge in Iowa refused to stop the state from regulating Kalshi under its gambling laws, a setback for the prediction market operator’s argument that federal commodities law overrides state enforcement.
The ruling matters beyond Iowa because it signals that courts may be skeptical when sports-related event contracts are framed as falling entirely outside state gambling regulation.
Iowa judge rejects Kalshi’s pre-emption argument
US District Judge Stephen Locher denied Kalshi’s motion for a preliminary injunction in the Southern District of Iowa, rejecting the company’s effort to block Iowa from regulating it under state gambling laws.
Kalshi filed its pre-enforcement suit in March after a meeting with Iowa Attorney General Brenna Bird’s staff led the company to believe the state might move against its business. But Locher said Kalshi was unlikely to succeed on the merits of its claim that federal law clearly preempts Iowa’s gambling rules.
As Locher put it:
“If Congress intended to pre-empt state gambling laws when it enacted and amended the Commodity Exchange Act, it should have been clear about that pre-emption.
“The text of the Commodity Exchange Act does not meet the mark.”
The judge also said the CFTC’s “exclusive jurisdiction” applies only to “swaps or contracts of sale of a commodity for future delivery,” and found that the statutory definition at issue does not specifically reference sports betting.
Why the ruling could matter outside Iowa
Locher’s order focused heavily on whether sports-outcome contracts fit comfortably within the federal framework Kalshi cited. He wrote that it is easy to read the law as covering events in financial or asset markets, such as changes in interest rates or grain prices, but “harder to conclude” Congress meant it to include sporting events.
The judge also noted that Kalshi had described itself in an advertisement as “the first app for legal sports betting in all 50 states.” In his view, the company moved ahead without apparently trying to determine whether the Iowa attorney general or the Iowa Racing and Gaming Commission would view its sports-related event contracts as illegal gambling.
For now, the immediate takeaway is procedural but important: Iowa is not blocked from regulating Kalshi while the broader case continues. Still unresolved are whether Iowa will ultimately take enforcement action, whether Kalshi will appeal, and how the court will rule on the full merits of the company’s claims.
Based on reporting by Rox Laird for Courthouse News Service.
