CFTC sues Utah to protect prediction market regulation

The Commodity Futures Trading Commission (CFTC), joined by the U.S. Department of Justice, has filed a lawsuit against the State of Utah and Attorney General Derek Brown. The federal action seeks preliminary and permanent injunctions to prevent Utah from enforcing state gambling laws against Kalshi, a prediction market platform regulated by the CFTC.

The legal conflict stems from a jurisdictional dispute over whether event-based contracts constitute regulated derivatives or illegal gambling. While the CFTC maintains that these contracts fall under its regulatory umbrella, Utah officials argue that such activities are unauthorized forms of wagering under state law. This follows a recent lawsuit by Utah’s Attorney General seeking to halt Kalshi’s operations and recover estimated fees between $30.6 million and $61.2 million.

The litigation in Utah marks an escalation in a broader struggle involving ten states, as the federal government attempts to defend its authority over prediction markets against state-level gaming statutes.