CFTC Sues Utah, the 10th State It Has Taken On Over Prediction Markets

The Commodity Futures Trading Commission sued Utah on Tuesday to stop the state from using its gambling laws against federally registered prediction markets. Utah is the 10th state the agency has moved against in court.

The fight is over who gets to police event contracts, the yes-or-no bets on real-world outcomes that users trade with each other. That reaches crypto platforms too: Robinhood reported $173 million in event contracts revenue for the third quarter on Tuesday.

Utah went after Kalshi first

Utah Attorney General Derek Brown sued Kalshi and related companies on Oct. 20 in state court in Salt Lake County, alleging its markets are illegal gambling. The suit also names two Susquehanna trading firms, the CFTC complaint shows.

The CFTC's complaint, filed Oct. 26 in federal court against Utah and Brown, argues that a contract paying out on an event is a swap under the Commodity Exchange Act. Congress gave the CFTC "exclusive jurisdiction" over those, the complaint says.

"Congress entrusted the CFTC to be the federal regulator with sole responsibility to oversee these markets," CFTC Chairman Michael Selig said.

What Utah says

Brown said on Oct. 20 that "Kalshi runs an online casino in Utah and calls it a prediction market." A spokesperson for his office declined to comment on the CFTC suit, Utah Politics reported. Kalshi has rejected the gambling charge, Politico reported.

Courts have sided with Utah so far. In August, U.S. District Judge Robert Shelby ruled that federal law doesn't override Utah's gambling laws, and the 10th Circuit on Sept. 8 refused to pause enforcement while Kalshi appeals.

In our opinion: the decision that counts sits with the 10th Circuit, where Kalshi's appeal is still pending. A ruling there would carry more weight than this new filing.