CFTC sues Utah to block prediction market enforcement
The federal agency is challenging Utah's actions against prediction market platform Kalshi, escalating a wider dispute over state and federal regulatory authority.
Key takeaways
- 1The CFTC sued Utah on Monday to block state enforcement against prediction markets.
- 2Utah sought up to $60 million in alleged illegal profits from prediction market platform Kalshi.
- 3The CFTC claims exclusive federal jurisdiction over registered exchanges for event contracts.
- 4The agency has filed legal actions against nine other states in similar disputes.
- 5New Jersey petitioned the Supreme Court in September on a similar case involving Kalshi.
The US Commodity Futures Trading Commission (CFTC) sued Utah on Monday to prevent the state from enforcing gambling laws against federally regulated prediction markets.
The lawsuit follows civil enforcement actions by Utah against CFTC-registered exchanges. Utah officials had announced legal action against prediction market platform Kalshi, seeking to recover up to $60 million in alleged illegal profits from event contracts.
In its filing in the US District Court for the District of Utah, the CFTC argued that Utah's enforcement actions conflict with federal derivatives laws. The agency said Congress granted it exclusive control over registered exchanges for event contracts.
CFTC Chairman Michael S. Selig said Utah was attempting to shut down prediction markets across several categories. He added that event contracts are hedging instruments and can be used to gather information about future outcomes.
This dispute comes months after Kalshi lost a case in Utah, making it open to enforcement under Utah state gambling statutes. Kalshi has maintained that federally regulated event contracts should fall under CFTC jurisdiction, not state gambling laws.
The Utah lawsuit is part of broader action by the CFTC against state limitations on federally registered prediction markets. The agency has also filed legal actions against nine other states in similar jurisdictional disputes and submitted legal briefs in four federal appeals courts and one state supreme court.
These filings aim to establish whether federal derivatives laws prevent states from regulating certain event contracts. In September, New Jersey officials petitioned the Supreme Court to weigh in on their case against Kalshi, similar to other lawsuits pending in Michigan, Ohio, Kentucky, Nevada, Massachusetts, Wisconsin, and New York.
The CFTC is also investigating whether Polymarket breached its 2022 settlement, which imposed limitations on US access to its offshore platform. This probe, reported by CoinGape, includes Polymarket's geographic controls, advertising to American customers, and its customer onboarding and protection processes for its US platform. The agency had previously concluded similar probes in 2025 without charges.
Chairman Selig insisted the agency would defend its authority to regulate when states dispute federally registered exchanges. However, courts have not yet reached a final decision on the nationwide jurisdictional issue.
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