CFTC Sues Utah And Attorney General Derek Brown To Block Prediction Market Enforcement

CFTC moves against Utah

The Commodity Futures Trading Commission sued Utah and Attorney General Derek Brown in federal court to block state enforcement against CFTC-registered prediction market exchanges, and the filing sought preliminary and permanent injunctions covering state investigations and enforcement involving transactions on CFTC-regulated designated contract markets.

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The CFTC filed a 33-page complaint in the U.S. District Court for the District of Utah, naming Utah and Brown as defendants and asking for a declaration that Utah's gambling laws, election-betting prohibition and public-nuisance statute are invalid as applied to covered transactions.

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CFTC Chairman Michael S. Selig said, "Congress entrusted the CFTC to be the federal regulator with sole responsibility to oversee these markets," and the agency argued that event contracts targeted by Utah qualify as "swaps" under the Commodity Exchange Act.

Utah’s state case against Kalshi and Susquehanna entities sought up to $61.2 million in fees and trading restrictions, and the CFTC’s suit marked the tenth state it has sued in a widening campaign to defend what it calls its exclusive authority over prediction markets.

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State and market responses

Utah Attorney General Derek Brown said, "Kalshi runs an online casino in Utah and calls it a prediction market. That violates Utah law," as Utah pursued an injunction, restitution, and the surrender of allegedly unlawful profits.

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Kalshi spokesperson Jacki McGavick disputed Utah’s characterization and said, "As a national derivatives market overseen by the CFTC, Kalshi answers to federal law, and no single state should have a veto over it," in response to Utah’s enforcement action.

The CFTC’s complaint argued that Utah’s efforts would expose exchanges to "the prospect of 50 regulators across the country," and it invoked the Constitution’s Supremacy Clause as its single claim.

The dispute built on an August federal ruling in which U.S. District Judge Robert Shelby granted summary judgment to Utah in an earlier suit Kalshi brought against state officials, and the Tenth Circuit later denied Kalshi’s emergency injunction request on Sept. 8 while the appeal proceeded.

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Supreme Court stakes

The CFTC’s federal suit asked the court to bar Utah officials, their successors, agents and employees from investigating or enforcing against transactions listed, offered or executed on CFTC-registered designated contract markets, and it extended requested relief to exchanges’ affiliates and partners. The complaint also sought a declaration that Utah’s laws are invalid as applied to covered transactions, and it argued that allowing states to police the same contracts would intrude on "the exclusive federal scheme Congress designed to oversee United States commodity derivatives markets."

New Jersey officials petitioned the Supreme Court to weigh in on their dispute with Kalshi, and the sources said the Supreme Court had not announced whether it would hear arguments as of Tuesday. The broader fight already included CFTC preemption actions in Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin, while the CFTC’s suit against Utah set up another test of whether states can use local laws to restrict prediction markets operating under federal derivatives regulation.

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