CFTC sues Utah to block state ban on prediction-market platform Kalshi

The U.S. Commodity Futures Trading Commission (CFTC) has filed a lawsuit in the U.S. District Court for the District of Utah seeking to prevent the state from enforcing its gambling ban against Kalshi, a CFTC-registered prediction-market exchange. The suit follows Utah Attorney General Derek Brown's recent state-court action that aims to bar Kalshi from offering contracts on sports, elections and other events.

"Utah seeks to shut down prediction markets across a wide variety of markets," CFTC Chairman Michael Selig said. "Event contracts do not just serve hedging and investment purposes—they also provide the public with information about the outcome of future events. Congress entrusted the CFTC to be the federal regulator with sole responsibility to oversee these markets. As I’ve said before, the CFTC has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives, and that’s exactly what we’ll do."

Utah previously won a summary-judgment ruling in federal court that upheld the state's authority to enforce its anti-gambling laws, with Judge Robert Shelby noting that the Commodity Exchange Act allows for state regulation of gaming. Kalshi is now appealing that decision to the Tenth Circuit, which denied an emergency injunction on September 8.

The CFTC's filing mirrors earlier lawsuits against Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin, and it cites decisions from other circuits that have temporarily blocked state enforcement of gambling laws against CFTC-regulated exchanges. The split among appellate courts on whether prediction-market contracts qualify as swaps and fall under exclusive federal jurisdiction could prompt the Supreme Court to resolve the issue, a matter that New Jersey and a coalition of 39 states and the District of Columbia have urged the Court to consider.