CFTC Sues Utah Over Kalshi Restrictions

The U.S. Commodity Futures Trading Commission (CFTC) and the Department of Justice have sued the state of Utah in federal court. The lawsuit concerns efforts to restrict Kalshi, a prediction market operator. According to the complaint, the state's actions threaten the regulatory authority of federally regulated derivatives exchanges.

The 33-page complaint, filed on Monday, asks the court to block Utah Attorney General Derek Brown from enforcing state gambling rules against exchanges registered with the CFTC. The agencies argue that the state's actions cause irreparable harm to federal interests. The case follows Utah's October 20 lawsuit against Kalshi and two Susquehanna trading firms. It is reported to be the CFTC's 10th lawsuit against a state seeking to restrict prediction markets, and the first against a state led by a Republican governor.

The core of the dispute is whether event contracts offered by platforms like Kalshi are subject to federal financial law or state gambling laws. The CFTC argues that Congress gave it exclusive authority over regulated commodity derivatives. Some states, however, contend that these contracts amount to unlawful betting.

Utah has also filed its own case in the Third District Court of Salt Lake County. The state claims the companies are running an illegal gambling operation and that Kalshi's activities disrupt public order. In a statement, Brown said Kalshi operates an online casino in Utah, calls it a prediction market, and that this violates state law.