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Trump admin sues Utah to save Kalshi from the state's total ban on gambling
US agency has sued 10 states for trying to stop gambling on prediction markets.
The Trump administration is trying to stop Utah from enforcing its gambling ban against Kalshi, making Utah the 10th state sued by the US government agency that regulates prediction markets.
Utah, which prohibits gambling, sued Kalshi in a state court last week. Utah’s lawsuit seeks an order prohibiting Kalshi from offering bets on sports, elections, politics, and other events.
“Kalshi runs an online casino in Utah and calls it a prediction market. That violates Utah law,” Utah Attorney General Derek Brown, a Republican, said last week. “Not only do our state laws ban gambling but Utah is one of only two states where gambling is also prohibited under the state constitution. For 130 years, Utah has been clear: gambling has no place here, and we will enforce our laws.”
Utah already defeated Kalshi in federal court after the prediction market filed a preemptive lawsuit that sought to prevent the state from enforcing its gambling laws. Now that Utah is moving ahead in its attempt to shut down Kalshi, it must defend against a lawsuit filed by the US Commodity Futures Trading Commission (CFTC).
The CFTC “has filed a lawsuit against Utah to block the state’s efforts to shut down CFTC-registered contract markets using state laws,” the commission said yesterday. “The lawsuit follows Utah’s decision to file civil enforcement actions in state court against CFTC-regulated markets and other businesses. Utah’s effort to restrict the functioning of CFTC-registered exchanges obstructs Congress’s decision to federally preempt state law.”
If Utah can shut down Kalshi, that could spell trouble for Kalshi’s chief prediction-market rival, Polymarket, and for sports betting sites like DraftKings and FanDuel. DraftKings and FanDuel advertise availability in all US states via a mix of products, including prediction-market platforms in states like Utah. Both are registered with the CFTC.
The Utah attorney general’s office declined to comment today on the CFTC lawsuit. The CFTC previously filed lawsuits against Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island, and Wisconsin. The federal agency also filed briefs supporting Kalshi in appeals court cases.
“Utah seeks to shut down prediction markets across a wide variety of markets,” CFTC Chairman Michael Selig said. “Event contracts do not just serve hedging and investment purposes—they also provide the public with information about the outcome of future events. Congress entrusted the CFTC to be the federal regulator with sole responsibility to oversee these markets. As I’ve said before, the CFTC has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives, and that’s exactly what we’ll do.”
The US Commodity Exchange Act (CEA) gives the CFTC authority to regulate swaps. The key legal questions being grappled with by courts throughout the US are whether event contracts offered by prediction markets qualify as swaps, and whether the CFTC jurisdiction over swaps preempts states from applying their gambling laws.