CFTC Sues Utah to Block Closure of Registered Markets in Dispute Extending Beyond the State
Key Facts
The U.S. Commodity Futures Trading Commission said on October 27, 2026, that it had sued Utah to prevent the state from shutting down markets registered with the commission under state law. The commission says Utah’s efforts to restrict those markets impede Congress’s decision to preempt state laws in this area. The move pits federal jurisdiction against the state’s attempt to apply its laws to prediction-market platforms. Commission Chairman Michael Selig said Congress had given it "exclusive responsibility for overseeing these markets." He added that event contracts provide the public with information about the outcomes of future events.
The lawsuit centers on whether platforms registered with the commission can operate in Utah despite restrictions the state seeks to enforce. The commission said its aim is to prevent Utah from using state laws to shut down those markets. Utah sued Kalshi on October 20, 2026, accusing the platform of engaging in illegal gambling. The state estimated that Kalshi had collected between $30.6 million and $61.2 million in fees from Utah-linked accounts through October 19. These are estimates of fees cited in the state’s lawsuit, not confirmed profits or a judicial ruling on the amount.
Utah’s lawsuit cited indicators of the platform’s scale in the state. According to information included in the complaint, Kalshi had about 55,800 accounts registered to Utah addresses as of February 2026. Those accounts had placed more than 5 million bets by February 25, according to the lawsuit. The state said between 80% and 90% of bets on the app were tied to sporting events. The complaint described those bets as indistinguishable, from the user’s perspective, from wagers offered by traditional bookmakers. The attorney general also estimated that Utah residents’ betting losses totaled at least $5.5 million through May 2026, based on the assumption that they were proportional to the platform users’ losses overall.
The federal commission’s argument faces an earlier ruling in the same dispute: in August 2026, a federal judge denied Kalshi’s request to block Utah from enforcing its restrictions. The judge said the federal law cited by the company did not prevent the state from enforcing its laws. In similar cases, courts in Maryland, Nevada, Ohio, New York and Wisconsin ruled against Kalshi, while courts in New Jersey, Tennessee, Arizona and Minnesota ruled in its favor. The split rulings reflect a judicial dispute over the limits of federal regulation and state laws. The new lawsuit has not resolved that dispute; the commission is challenging Utah’s enforcement of its laws against markets under its oversight.
The commission describes event contracts as typically structured as swaps, which can be used to hedge economic risks or speculate on prices and event outcomes. That classification is part of the basis on which the CFTC asserts jurisdiction over markets registered with it. The commission said its action against Utah is part of legal proceedings it has initiated against 9 other states. In April 2026, it sued Wisconsin after the state brought civil actions against 5 regulated prediction markets, including Kalshi, Polymarket, Crypto.com, Robinhood and Coinbase. These cases place the Utah dispute within a broader confrontation between the commission and states over the regulation of prediction markets.
Alongside the litigation, the commission is pursuing rulemaking: on October 9, 2026, it published a regulatory proposal on including certain event contracts in the definition of a swap. The proposal adds a regulatory track to the dispute over which authority has the power to regulate these markets. In a separate statement, the commission said the NBA had joined MLB and the NHL in steps to protect the integrity of sports and participants in prediction markets from abuses such as insider trading and fraud. Reuters reported that the NBA’s agreements with Kalshi and Polymarket imposed restrictions on the markets they may offer. The commission’s efforts to establish a federal framework thus intersect with the dispute over how far state laws apply to platforms’ products.