CFTC sues Utah to protect Kalshi's prediction market offering as state-federal clash deepens
The CFTC has filed a federal lawsuit seeking to stop Utah's attorney general from restricting Kalshi, escalating the dispute over whether states or federal regulators control prediction markets.
GamblingSource: CoinDesk
The U.S. Commodity Futures Trading Commission has gone to federal court to block Utah's attempt to curb prediction market betting within its borders. Utah constitutionally bans gambling, and its attorney general recently launched an enforcement effort aimed at stopping Kalshi from serving residents. The CFTC announced its own lawsuit on Tuesday.
The agency is asking the court to halt the state's action. It stepped in after Utah had so far come out ahead against Kalshi in federal court, where a district court judge sided with the state in a case that is also under appeal.
CFTC Chairman Mike Selig said event contracts serve more than hedging and investment purposes, arguing that they also give the public information about the outcomes of future events. His statement also defended his view that the agency is the sole regulator of prediction markets.
Utah Attorney General Derek Brown took the opposite position last week, saying anyone offering gambling to Utahns is on notice that it is illegal and that no Utah law authorizes it. He accused Kalshi of operating an online casino.
The conflict between state authority and federal preemption, with Kalshi and other prediction market firms backing the federal side, has become harder to resolve because courts have not spoken with one voice. Three federal appellate courts have issued decisions that split, with two favoring the states and one siding with Kalshi.
The CFTC is currently in litigation with 10 states and is making arguments at every level of the judicial system. It is doing so after losing legal staff as the Trump administration has pushed to shrink regulatory agencies.
The agency's position also faces opposition from prominent figures involved in the underlying law. Former CFTC chairman Gary Gensler, who later led the Securities and Exchange Commission, filed a brief with the U.S. Supreme Court arguing that the Dodd-Frank Act did not move jurisdiction over sports betting from the states to the CFTC. Former Senator Chris Dodd, one of the act's authors, also filed an amicus brief supporting the states' view.
Based on reporting by CoinDesk.