CFTC sues Utah to stop its gambling case against Kalshi, the agency's tenth lawsuit against a state over prediction markets

Published Tue, 27 Oct 2026 12:58:38 UTC · Updated Tue, 27 Oct 2026 22:05:00 UTC · Edited by Bizzle · AI-assisted

⚪NeutralThe federal regulator is backing prediction markets against a state, but courts are split and the outcome is unresolved, and the dispute is not tied to any coin.News sentiment, not financial advice. It reflects the likely impact of this news, not a price prediction.

Summary

The Commodity Futures Trading Commission said Tuesday it has sued Utah to block the state from using its own laws to shut down CFTC-registered prediction markets, after Utah filed civil enforcement actions in state court against CFTC-regulated markets and other businesses.

The Block reported the suit was filed in the U.S. District Court for the District of Utah, Central Division, against the state and Attorney General Derek Brown, following Utah's lawsuit accusing Kalshi of offering illegal gambling to residents.

"Congress entrusted the CFTC to be the federal regulator with sole responsibility to oversee these markets," CFTC Chairman Michael Selig said, arguing that federal law preempts state law for these exchanges.

The CFTC said it has also started legal proceedings against nine other states; The Block listed them as Arizona, Connecticut, Illinois, New York, Wisconsin, Minnesota, Rhode Island, New Mexico and Kentucky.

Courts remain split: CoinDesk said three federal appeals courts have issued two decisions siding with states and one with Kalshi, and a U.S. district judge in Utah sided with the state in a case that is under appeal.

Key facts

"Event contracts do not just serve hedging and investment purposes—they also provide the public with information about the outcome of future events," Selig said in the CFTC's release. (CFTC)
The CFTC said it has submitted briefs in four federal courts of appeal and one state supreme court. (CFTC)
Utah's lawsuit called Kalshi a "public nuisance that is causing substantial ongoing harm" to residents, The Block reported; the Utah Attorney General's office did not immediately respond to The Block's request for comment. (The Block)
"Anyone offering gambling to Utahns is on notice that it is illegal in Utah and that no Utah law authorizes it," Brown said last week, as quoted by CoinDesk. Gambling is constitutionally banned in Utah, CoinDesk noted. (CoinDesk)
Former CFTC and SEC chair Gary Gensler filed a U.S. Supreme Court brief arguing the Dodd-Frank Act "did not transfer jurisdiction over sports betting from the states to the CFTC," and former Senator Chris Dodd filed a brief backing the states' view, CoinDesk reported. (CoinDesk)
Separately on Tuesday, Reuters reported the CFTC is investigating whether Polymarket broke its 2022 settlement promise to keep U.S. users off its overseas platform, according to The Block. (The Block)