Federal Judge Denies Kalshi Injunction Request in Iowa

• Iowa District Court judge has denied Kalshi’s motion for a preliminary injunction
• Rules Kalshi is unlikely to succeed on merits of its argument that the Commodity Exchange Act preempts Iowa law
• Kalshi preemptively sued Iowa Attorney General Brenda Bird in March

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The U.S. District Court for the Southern District of Iowa Central Division this week denied Kalshi’s motion for a preliminary injunction in Iowa, noting the prediction market company is unlikely to succeed on merits of its argument that the Commodity Exchange Act preempts state law.

Kalshi sued Attorney General Brenna Bird and the Iowa Racing and Gaming Commission after a March 4, 2026 meeting with Bird, in which the company said it was made clear that she believed Kalshi’s prediction market offerings run afoul of Iowa state law.

U.S. District Court Judge Stephen H. Locher denied Kalshi’s preliminary injunction motion, citing his opinion that sports event contracts are not “swaps” under the Commodity Exchange Act (CEA) and are not subject to the Commodity Futures Trading Commission’s (CFTC) “exclusive jurisdiction.”

Not Preempted by CEA

Judge Locher noted in his decision that Kalshi’s field preemption argument is “highly unlikely to succeed.”

“It is simply not reasonable to conclude that Congress implicitly intended to foreclose state regulation in the entire field of sports gambling when it passed a law that had nothing to do with gambling,” he wrote.

As the court concluded, Locher reported that sports-related event contracts are not “swaps” under the CEA, there is no “uniform federal scheme” with respects to such contracts, and the CFTC does not have the “exclusive authority” to permit or forbid them.

It is not impossible, he reported, for Kalshi to follow both state and federal regulations when it comes to their sports event contract offerings.

“Instead, Kalshi simply must follow the laws and regulations of each state in which it makes those contracts available, in addition to following whatever federal requirements exist through the CFTC. This may be inconvenient for Kalshi, but it is not impossible,” he wrote.

The U.S. District Court denial of Kalshi’s preliminary injunction request now leaves the company open to Iowa gambling law enforcement.

Kalshi Sues Ahead of State Enforcement

Counsel for Kalshi reported a March 4, 2026 meeting with Bird factored into the company’s decision to take preemptive action against the state. In what was thought to be a meeting to introduce the attorney general to a Kalshi representative and to discuss a tax bill under consideration in the state legislature, the meeting shifted into what was described as “like a deposition.”

According to the lawsuit, Bird explained during the meeting that Iowa has been “looking at Kalshi for a long time.”

“Understandably concerned by the tenor of what was intended to be a friendly meeting on a different topic, on March 10, 2026, Kalshi contacted a representative of the Iowa AG to seek assurances that the Iowa AG did not intend to bring an enforcement action against Kalshi. The representative did not provide such assurances. To the contrary, the official said in writing that ‘we will not give any assurances about potential future enforcement.’”

Counsel reported in the lawsuit that Bird made it “abundantly clear that she believes Kalshi’s event contracts constitute unlawful gaming” and put Kalshi at risk of civil or criminal enforcement in the state.

“Accordingly, Defendants’ anticipated actions threaten impending and irreparable harm, not just to Kalshi, but to its customers and commercial counterparties. Shutting down Kalshi’s ability to offer event contracts in Iowa would threaten Kalshi’s viability and require devising complex technological solutions whose feasibility is entirely untested and unclear,” counsel reported.

Counsel reported that by threatening to enforce Iowa’s anti-gambling laws against the company, the defendants are intruding on the Commodity Futures Trading Commission’s (CFTC) exclusive authority to regulate futures trading on CFTC-regulated exchanges.