CFTC asks federal court to halt Utah lawsuit against Kalshi
Federal agency says Commodity Exchange Act preempts state prosecution of CFTC‑regulated markets.
Key Takeaways
- The CFTC asked a federal judge to block Utah from treating CFTC‑regulated prediction markets as illegal gambling.
- The United States and the CFTC filed a federal complaint in Utah after the State of Utah sued Kalshi on 20 October.
- The CFTC is seeking a declaratory judgment, preliminary injunction and a permanent order based on federal preemption under the Commodity Exchange Act.
- The agency has pursued similar actions in nine other states and obtained preliminary injunctions in Arizona, Illinois and Minnesota.
The Commodity Futures Trading Commission asked a federal judge to block Utah from treating CFTC‑regulated prediction markets as illegal gambling after the state lawsuit against Kalshi filed last week. The agency announced the federal action on Tuesday; the complaint was filed Monday in federal court in Utah, with the United States and the CFTC as plaintiffs and the State of Utah and Attorney General Derek Brown as defendants.
What the CFTC is asking for and the legal basis
The CFTC seeks a declaratory judgment and a preliminary injunction, followed by a permanent order, to stop Utah’s suit against Kalshi and any future enforcement or investigation directed at exchanges registered with the CFTC. The legal theory is federal preemption: the plaintiffs argue that the Commodity Exchange Act displaces state laws on gambling, election betting and public nuisances when applied to event contracts on exchanges registered with the CFTC. The agency tied the request to its federal mandate and jurisdictional authority.
"Utah seeks to shut down prediction markets across a wide variety of markets," said Michael Selig, Chairman of the CFTC, according to the statement.
The Utah case against Kalshi
On 20 October, Attorney General Derek Brown’s office for the State of Utah sued Kalshi in the Third Judicial District Court in Salt Lake County, alleging the platform allows residents to bet on sports, elections and political events in violation of state law. The federal complaint notes the state suit also names two Susquehanna entities and seeks restitution, disgorgement and punitive damages among other remedies. Brown said at the time: "Kalshi runs an online casino in Utah and calls it a prediction market." On 8 September the Tenth Circuit denied Kalshi’s request to pause enforcement while it appealed Judge Robert Shelby’s August decision.
Parallel litigation in other states
The CFTC says it has initiated proceedings in nine other states and filed briefs in four federal courts of appeals and one state supreme court. According to the complaint, courts have issued preliminary injunctions in favor of the federal government in three states: Arizona, Illinois and Minnesota. In May the agency acted against Minnesota over a law that would have criminalised operating a prediction market. The other states named are Connecticut, Kentucky, New Mexico, New York, Rhode Island and Wisconsin. In Rhode Island the CFTC asked to intervene in the Kalshi case. For broader context on regulatory fights over similar rules, see [regulation](/regulation).
Platforms have also filed suits: Polymarket sued Ohio in federal court on 16 October, citing new CFTC rules.
Next procedural steps
The federal court in Utah must now decide whether to grant the CFTC’s requested injunctions and thereby block the state prosecution of Kalshi and other CFTC‑registered exchanges. The agency is seeking to preserve federal jurisdiction over event contracts while appeals and parallel litigation proceed.
Frequently Asked Questions
What relief is the CFTC seeking in federal court?
The CFTC seeks a declaratory judgment and injunctions—first preliminary, then permanent—to stop Utah’s lawsuit against Kalshi and to prevent similar state enforcement against exchanges registered with the CFTC.
What did Utah allege in its suit against Kalshi and when was it filed?
Utah alleged on 20 October that Kalshi enables residents to bet on sports, elections and political events in violation of state law; the state case also names two Susquehanna entities and seeks restitution, disgorgement and punitive damages.
Which other states face similar CFTC actions?
The CFTC says it has acted in nine other states: Arizona, Illinois, Minnesota, Connecticut, Kentucky, New Mexico, New York, Rhode Island and Wisconsin, and federal courts issued preliminary injunctions in Arizona, Illinois and Minnesota.
Have other prediction‑market platforms responded with lawsuits?
Yes. Polymarket sued Ohio in federal court on 16 October, citing new CFTC rules; the CFTC also sought to intervene in the Kalshi case in Rhode Island.
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About the author
Renata Quiroga
Betting Markets Correspondent
Renata Quiroga covers sports betting and prediction markets — sportsbook launches, odds technology, event contracts, and the regulatory calls that decide what can be bet on and where. The reports open with the product or the ruling, name operators and platforms precisely, and explain the mechanics without needless jargon. When a book enters a Latin American market or a prediction exchange lists a contested contract, Renata Quiroga reports what changes for the bettor.
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