The CFTC sued Utah and its attorney general on Tuesday, saying the state is intruding on the agency's jurisdiction over prediction markets. The case is the regulator's tenth against a state. Utah has already won a separate ruling against Kalshi.
The U.S. Commodity Futures Trading Commission is escalating its legal fight with states. It filed a lawsuit against Utah in the U.S. District Court for the District of Utah, Central Division. It names the state and Attorney General Derek Brown as defendants, after Utah sued prediction market platform Kalshi and alleged it offered illegal gambling to residents.
According to CFTC Chair Michael Selig: "the CFTC has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives".
Tenth state in the CFTC's jurisdiction fight
The Utah suit follows actions against nine other states: Arizona, Connecticut, Illinois, New York, Wisconsin, Minnesota, Rhode Island, New Mexico and Kentucky. States have pushed back, saying they have jurisdiction over sports betting and that platforms operate illegally.
The 33-page complaint asks for preliminary and permanent injunctions covering state investigations and enforcement involving transactions on CFTC-regulated designated contract markets. The federal lawyers argue the Commodity Exchange Act gives the agency exclusive authority over the event contracts Utah targets.
Utah has already prevailed against Kalshi
Utah brought its own state-court case on Oct. 20 against Kalshi businesses and Susquehanna trading firms. The state is seeking to recover allegedly unlawful fees estimated at between $30.6 million and $61.2 million through Oct. 19.
Kalshi lost an earlier federal case. On Aug. 4, Judge Robert Shelby granted summary judgment to Utah, concluding the Commodity Exchange Act did not preempt enforcement of the state's anti-gambling laws against the company. On Sep. 8, the Tenth Circuit denied Kalshi's emergency injunction request during its appeal.
The question of whether the CFTC or the states have jurisdiction could reach the Supreme Court, according to The Block.
Polymarket faces a separate CFTC probe
Also on Tuesday, Reuters reported that the CFTC is investigating whether Polymarket violated a 2022 deal to ban U.S. users from its flagship overseas platform.
Sources: The Block, crypto.news
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