At a glance
- The United States and the Commodity Futures Trading Commission (CFTC) sued Utah and its attorney general, Derek Brown, in federal court in Salt Lake City, the CFTC said on Tuesday. The complaint was filed on Monday, 26 Oct.
- They want a judge to declare Utah’s gambling laws preempted for trades on CFTC-regulated exchanges, and to block the state’s week-old case against Kalshi along with any future investigations.
The case is United States v. Utah, No. 2:26-cv-01055, in the US District Court for the District of Utah. Justice Department Civil Division lawyers and the CFTC’s general counsel signed the complaint.
It answers the suit Utah filed in state court on 20 Oct, when Utah sued Kalshi and two Susquehanna firms, alleging illegal gambling and estimating up to $61.2 million in fees from Utah accounts.
What the federal complaint says
The argument is preemption. When Congress gives a federal agency “exclusive jurisdiction” over a market, state laws that try to regulate that market fall away.
The complaint says the contracts Utah is targeting are swaps under the Commodity Exchange Act. It says the exchanges listing them are designated contract markets, the CFTC’s term for a licensed futures exchange.
Utah’s case, it argues, would “wipe out the operation of CFTC-regulated exchanges within the State”. It asks for a preliminary injunction, a court order that holds while the case runs, and later a permanent one.
“Utah seeks to shut down prediction markets across a wide variety of markets,” CFTC Chairman Michael Selig said in the release. “Congress entrusted the CFTC to be the federal regulator with sole responsibility to oversee these markets.”
What Utah says
Utah has not backed down. “Anyone offering gambling to Utahns is on notice that it is illegal in Utah and that no Utah law authorizes it,” Brown said, according to CoinDesk.
The state has the earlier federal ruling on its side. A federal judge in Utah sided with the state against Kalshi this summer, and that decision is on appeal.
The scorecard so far
Utah is the tenth state. The complaint lists earlier CFTC preemption suits against Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin. Federal judges have granted preliminary injunctions in Arizona, Illinois and Minnesota.
The appeals courts are split. Three federal appeals courts have ruled so far, two for the states and one for Kalshi, CoinDesk reported. The CFTC says it has filed briefs in four federal appeals courts and one state supreme court.
The question has also reached the Supreme Court, where former SEC chair Gary Gensler filed a brief arguing that the Dodd-Frank Act “did not transfer jurisdiction over sports betting from the states to the CFTC”, CoinDesk reported. Former senator Chris Dodd, a co-author of that law, filed one too. The leagues have weighed in as well; see the NFL’s amicus brief against Kalshi.
What happens next
Utah must now answer in federal court, and the government is expected to press for its preliminary injunction first. No hearing date was public on Tuesday.
The state case against Kalshi carries on in the meantime. The CFTC’s own rulebook is also in motion; see the CFTC’s event-contract proposal.
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This article is for information only and is not investment advice.