CFTC sues Utah over prediction market jurisdiction

The U.S. Commodity Futures Trading Commission (CFTC) has filed a federal lawsuit against the State of Utah and Attorney General Derek Brown to block state-level enforcement against prediction markets. The legal action follows Utah’s attempt to sue Kalshi and Susquehanna trading firms, seeking up to $61.2 million in damages and an injunction to prohibit trading on sports and political event contracts within the state.

The CFTC argues that under the Commodity Exchange Act, it holds exclusive jurisdiction over these event contracts, which it classifies as “swaps” traded on federally regulated designated contract markets. The regulator contends that Utah’s actions attempt to “federally preempt state law” and interfere with markets designed to be overseen by a single federal framework.

This dispute marks the CFTC’s tenth lawsuit against various states regarding the boundaries of federal oversight. While a federal judge in Utah previously ruled in August that state gambling laws could still apply to Kalshi’s contracts, the CFTC is seeking to overturn such interpretations. The outcome of this legal battle may ultimately require a decision from the U.S. Supreme Court to resolve the conflict between state gambling regulations and federal derivatives oversight.