On October 26, 2026, the Commodity Futures Trading Commission filed a federal lawsuit against Utah and Attorney General Derek Brown to block state enforcement against prediction market platform Kalshi. The lawsuit marks the CFTC's tenth legal challenge against state regulators, arguing federal commodities law preempts state gambling bans. Utah previously sued Kalshi seeking up to $61.2 million, accusing it of operating an illegal casino. The federal-state showdown reflects growing judicial splits that may reach the U.S. Supreme Court.
CFTC lawsuit against Utah
- ▪The CFTC's federal complaint argues that the Commodity Exchange Act preempts Utah's gambling, election-betting, and public nuisance laws regarding event contracts traded on CFTC-registered exchanges
- ▪The Commodity Futures Trading Commission (CFTC) asserts in its complaint against Utah that event contracts offered on registered exchanges qualify as financial swaps under the Commodity Exchange Act
- ▪The CFTC sued the State of Utah and Attorney General Derek Brown in federal court, seeking preliminary and permanent injunctions barring enforcement of state gambling laws against CFTC-registered prediction exchanges, starting with Kalshi
Statements asserting exclusive federal jurisdiction
- ▪CFTC Chair Michael Selig stated that Congress granted the agency sole responsibility and exclusive jurisdiction to oversee commodity derivatives and designated contract markets
- ▪Kalshi spokesperson Jacki McGavick stated that as a national derivatives exchange registered with the CFTC, Kalshi answers exclusively to federal law
Utah lawsuit against Kalshi
- ▪Utah Attorney General Derek Brown stated that gambling is constitutionally banned in Utah and that no state law authorizes prediction market gambling for residents
- ▪Utah's October 20, 2026 lawsuit against Kalshi and Susquehanna seeks an injunction, public nuisance abatement, restitution, disgorgement, and damages estimated between $30.6 million and $61.2 million
- ▪Utah Attorney General Derek Brown filed a lawsuit in state court against Kalshi and Susquehanna entities, alleging they facilitate illegal gambling on sports, elections, and politics
Prior court rulings in Utah
- ▪U.S. District Judge Robert Shelby ruled that the Commodity Exchange Act does not prevent states from enforcing gambling prohibitions
- ▪On September 8, 2026, the U.S. Tenth Circuit Court of Appeals denied Kalshi's request to pause Utah's enforcement while appealing an August 4, 2026 ruling by U.S. District Judge Robert Shelby
CFTC enforcement in other states
- ▪Federal courts have entered preliminary injunctions in favor of the Commodity Futures Trading Commission (CFTC) in its prediction market regulatory disputes involving Arizona, Illinois, and Minnesota
- ▪Utah is the tenth state against which the Commodity Futures Trading Commission (CFTC) has initiated legal proceedings, following actions involving Arizona, Connecticut, Illinois, New York, Wisconsin, Minnesota, Rhode Island, New Mexico, and Kentucky
States' opposition to prediction markets
- ▪States opposing CFTC authority argue that prediction platforms operate illegal gambling operations while avoiding state sports betting taxes and regulations
- ▪In July 2026, 44 state attorneys general formally contested the CFTC's regulatory authority over sports-related event contracts
Appellate split and Supreme Court appeals
- ▪New Jersey petitioned the U.S. Supreme Court to resolve the jurisdictional split between the CFTC and states regarding prediction markets after losing its appeal in the Third Circuit
- ▪Former SEC Chair Gary Gensler filed an amicus brief with the U.S. Supreme Court arguing that the Dodd-Frank Act did not transfer sports betting jurisdiction from states to the CFTC
- ▪Federal circuit courts have split on prediction markets, with the Third Circuit supporting Kalshi against New Jersey, while the Sixth and Ninth Circuits supported state authority in Ohio, Tennessee, and Nevada
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