CFTC Challenges Utah Over Prediction Market Authority

The 33-page complaint, filed in the U.S. District Court for the District of Utah, argues that the Commodity Exchange Act grants the CFTC exclusive oversight of event contracts, which the government classifies as swaps. Federal lawyers contend that allowing individual states to regulate these markets would expose exchanges to a chaotic patchwork of 50 different regulatory regimes, effectively obstructing the national framework for derivatives.

This confrontation follows an October 20 state-court action where Utah sought to recover up to $61.2 million in fees from Kalshi, labeling its prediction markets as illegal gambling operations. While Attorney General Derek Brown maintains that these platforms function as online casinos, the CFTC asserts that state statutes—including election-betting prohibitions—are preempted by federal law. The agency’s filing seeks preliminary and permanent injunctions to shield not only registered exchanges but also their affiliates and partners from state-led investigations. The current federal action follows an August ruling by U.S. District Judge Robert Shelby, who previously sided with Utah by concluding that federal law did not preempt the state’s anti-gambling statutes in a separate case involving Kalshi.