CFTC sues Utah over prediction market regulation

The Commodity Futures Trading Commission sued the State of Utah and Attorney General Derek Brown in the US District Court for the District of Utah. This legal move occurred one week after state officials announced action against prediction market platform Kalshi. The CFTC claims Utah is attempting to bypass congressional intent by restricting the functioning of CFTC-registered exchanges. The lawsuit argues that Utah's efforts intrude on the exclusive federal scheme Congress designed to oversee United States commodity derivatives markets.

CFTC Chair Michael Selig asserts that the regulator has exclusive jurisdiction over prediction markets. The lawsuit states that event contracts targeted by Utah are swaps under the federal Commodity Exchange Act. It also asserts that exchanges offering these contracts are CFTC-regulated Designated Contract Markets. Kalshi spokesperson Jacki McGavick stated that the company answers to federal law and no single state should have a veto over it.

Similar lawsuits regarding prediction markets are pending in Michigan, Ohio, Kentucky, Nevada, Massachusetts, Wisconsin, and New York. New Jersey officials petitioned the Supreme Court in September regarding their case against Kalshi. As of Tuesday, the Supreme Court had not announced whether it would hear arguments in the case.