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The Commodity Futures Trading Commission has sued the State of Utah to stop it enforcing gambling law against federally regulated prediction markets.
The CFTC announced the suit on 27 October in press release 9315-26. The complaint seeks declaratory and injunctive relief, and asks a court to block Utah from using state law to shut down CFTC-registered contract markets.
The agency's core argument is federal preemption. It says Utah's actions obstruct Congress's decision to preempt state law, and that the CFTC holds exclusive jurisdiction over these markets. CFTC Chairman Michael S. Selig said: "Congress entrusted the CFTC to be the federal regulator with sole responsibility to oversee these markets."
The state case behind the suit
Utah Attorney General Derek Brown filed a civil complaint on 20 October against Kalshi and related businesses. It alleges that Kalshi's event contracts are illegal gambling for Utah residents, and estimates that Kalshi collected between $30.6 million and $61.2 million in fees from Utah accounts. BettingNews notes these "remain allegations rather than established findings."
The courts had already ruled on the central question once. On 4 August, US District Judge Robert Shelby held that the Commodity Exchange Act does not preempt Utah's gambling prohibitions as applied to Kalshi's sports contracts. On 8 September, the Tenth Circuit denied Kalshi's emergency motion to pause enforcement during its appeal. The court wrote: "Kalshi has not shown these factors weigh in its favor. Accordingly, we deny its motion."
That order lets Utah keep enforcing its laws while the appeal runs, and state officials may now bring civil or criminal actions against Kalshi, according to Action Network. The Tenth Circuit's ruling was procedural and did not decide whether federal law preempts Utah's statutes.
Utah is the tenth state
The release says the CFTC has started legal proceedings against nine other states. BettingNews counts Utah as the tenth. The agency has also filed briefs in four federal courts of appeal and one state supreme court.
For operators, the open question is which regulator sets the rules for sports-style event contracts. Brown has already argued the opposite. After the August ruling he said the decision rejected any effort to "rebrand illegal gambling as a federal commodity."
Related coverage: Utah Sues Kalshi and Susquehanna Over Sports Contracts, Ninth Circuit Sides With Nevada Over Kalshi, Kalshi and Polymarket's Preemption Defense Hits a Split.