CFTC sues to block Utah from enforcing gambling laws against prediction markets

The Commodity Futures Trading Commission (CFTC) announced on Tuesday that it has filed a lawsuit against the state of Utah to stop the state’s efforts to shut down CFTC-registered contract markets.

The lawsuit follows a lengthy battle the state has been fighting against prediction markets. In August, a federal judge in Utah ruled that the Commodities Exchange Act does not block Utah from enforcing its gambling restrictions against prediction markets.

Enacted in the 1930s, the Commodities Exchange Act was updated after the 2008 financial crisis to give the CFTC the ability to regulate financial instruments known as swaps.

“Utah seeks to shut down prediction markets across a wide variety of markets,” said CFTC Chairman Michael S. Selig in a press release on Tuesday. “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.”

In February, CFTC-regulated prediction market platform Kalshi sued Utah Gov. Spencer Cox (R) and other state officials seeking to block a potential enforcement action. Utah is one of the few states in the country that bans all forms of gambling.

Selig announced earlier this year the CFTC would challenge any state’s attempt to regulate prediction markets, sparking a response from Cox, who said he would “use every resource within my disposal as governor of the sovereign state of Utah, and under the Constitution of the United States to beat you in court.”

Utah sued Kalshi this month alleging that the platform “lets Utahns bet on sports, elections, politics and other outcomes, and that this violates Utah’s gambling laws,” according to a press release from the office of Utah Attorney General Derek Brown.

“Kalshi runs an online casino in Utah and calls it a prediction market. That violates Utah law,” Brown said in the release.

In Tuesday’s announcement, the CFTC said, “if a state challenges the lawful operation of a derivatives exchange, the Commission will protect federal sovereign interests.”

“This action reflects the CFTC’s firm commitment to maintaining its exclusive jurisdiction over CFTC-registered prediction markets,” the release continued.