CFTC Sues Utah, NBA Enters Prediction Markets

The US Commodity Futures Trading Commission (CFTC) has sued to block Utah's pressure on federally regulated prediction markets. The lawsuit targets Utah Attorney General Derek Brown and the state. The CFTC argues that event contracts are swap-type instruments regulated at the federal level, and that federal law overrides state gambling laws.

The regulator says Utah's enforcement threatens to completely eliminate the presence of CFTC-supervised exchanges in the state. The commission also argues that if each state conducted its own regulatory enforcement, exchanges would face "50 regulators nationwide."

A few days before this lawsuit, Utah had sued Kalshi and two Susquehanna market-making firms, seeking the return of up to $61.2 million in alleged illegal gambling revenue. In August, federal Judge Robert Shelby ruled that Utah's gambling laws were not preempted by the Commodity Exchange Act, and Kalshi has appealed.

On the same day, the NBA announced that it had signed an integrity agreement with the CFTC and entered commercial partnerships with Kalshi, Polymarket and DraftKings. The league named Kalshi and Polymarket "Preferred Prediction Market Exchanges" and gave them access to league intellectual property, marketing opportunities and official league data through Sportradar. The league said these agreements were intended to protect the integrity of games.

With this development, the NFL is now the only major US sports league that has not entered a partnership with prediction markets. MLB, NHL and MLS had previously signed various agreements with operators or the federal regulator.