The Commodity Futures Trading Commission (CFTC) filed a federal lawsuit against the state of Utah on Tuesday, citing the agency’s “exclusive jurisdiction” over prediction markets, including sports event contracts. The CFTC’s legal action is in response to a recent Utah state court lawsuit against Kalshi and its institutional market maker, Susquehanna.
While Utah authorities, including state Attorney General Derek Brown, maintain that prediction exchanges are a form of gambling susceptible to regional enforcement, the CFTC’s view differs.
“Utah seeks to shut down prediction markets across a wide variety of markets,” stated CFTC Chairman Mike Selig on Tuesday in an official press release published by the agency. “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.”
Claiming preemption over state enforcement, the CFTC is currently involved in legal action that it has filed against multiple states, including Utah, New York, Illinois, Minnesota, and others. According to the federal agency, prediction markets are legal in all 50 states. Its authority extends to sports event contracts, which have become the most litigated product that exchanges offer nationwide.
Despite the CFTC’s jurisdictional claims, Kalshi and other prediction exchanges have been forced to geo-restrict their sports contracts in Massachusetts, Nevada, Michigan, and Washington. By the end of the year, more geo-blocks could be in place depending on the outcome of future cases that are currently being heard in state and federal courts across the nation.
Unlike many of the states that are involved in litigation against prediction markets in an attempt to preserve their regulatory oversight of sports betting, Utah has never authorized the activity. Betting on sports is explicitly banned within Utah’s constitution, which means there is no “turf war” aspect present in the legal disagreements between the state and the CFTC.
Utah’s intended enforcement against platforms such as Kalshi reaches beyond sports event contracts to include markets related to politics, elections, culture, and “mention” predictions. If Utah receives a favorable court ruling, it could theoretically force Kalshi and other exchanges to geo-restrict most of their contracts, leaving only cryptocurrency-related trades untouched.
Due to the circuit split on the regulatory categorization of prediction markets that currently exists, it is likely that one or more cases will eventually be heard by the US Supreme Court. However, the timeline for a potential SCOTUS resolution is forecast for mid-2027 at the earliest.
It is also possible that the Supreme Court would wait until more cases have run their course in state and federal courts before deciding whether to hear the legal arguments. As a result, prediction platforms could be legally compelled to abide by future geo-restriction mandates or risk hefty daily fines before the legal disputes reach SCOTUS.
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