CFTC sues Utah over prediction market crackdown – Here’s why
Who actually has the final say on prediction market betting?
The U.S. Commodity Futures Trading Commission (CFTC) has filed a federal lawsuit challenging Utah’s efforts to block prediction market betting.
According to a press release dated the 27th of October, the U.S. agency is arguing that federal law takes precedence over state gambling restrictions.
CFTC vs. Utah
Well, the dispute only escalated after Utah pursued legal action against Kalshi, alleging that its event contracts violated the state’s gambling laws. But the only problem here was that Kalshi is a CFTC-registered prediction market platform.
But since Utah has strict restrictions on gambling, including sports betting, the state argues that offering contracts on sports and other events can amount to illegal gambling, regardless of whether the platform is registered with a federal regulator.
Hence, in response, the CFTC and the U.S. Department of Justice (DOJ) filed a lawsuit in federal court seeking to prevent Utah from using its state laws against federally regulated exchanges.
Additionally, the CFTC contends that the Commodity Exchange Act (CEA) gives it exclusive authority over qualifying derivatives traded on registered exchanges.
CFTC’s chairman weighs in
Remarking on the same, Mike Selig, CFTC’s chairman, said,
Congress entrusted the @CFTC with the responsibility of ensuring uniform national regulation of prediction markets under a single federal rulebook.
He added,
As I’ve said before, the agency has the expertise and authority to defend its exclusive jurisdiction over commodity derivatives, and that’s exactly what we’ll do.
Therefore, if the court agrees, Utah could face restrictions on enforcing its gambling laws against the covered contracts, but as of now, the outcome remains uncertain.
Notably, the lawsuit marks the CFTC’s tenth legal challenge against a state, which it calls interference with its “exclusive jurisdiction.” This follows states including Arizona, Connecticut, Illinois, New York, Wisconsin, Minnesota, Rhode Island, New Mexico, and Kentucky.
Polymarket also falls under CFTC’s radar
At the same time, a recent report by Reuters uncovered that the CFTC is investigating whether prediction market operator Polymarket violated its 2022 settlement agreement by failing to adequately block U.S. users from its offshore platform.
In that case the CFTC is reviewing Polymarket’s geolocation controls, U.S. advertising, and customer safeguards, reviving a probe closed in July 2025 without charges. There, Polymarket says it has strengthened restrictions against VPN-based access.
Interestingly, all these crackdown efforts come after a time when the Congress failed to advance the CLARITY Act in September. However, AMBCrypto’s recent report suggests that CFTC’s Selig plans to use the agency’s existing authority to establish a more unified federal framework for U.S. crypto markets.
Final Summary
- Utah joins Arizona, Connecticut, Illinois, New York, Wisconsin, Minnesota, Rhode Island, New Mexico, and Kentucky in CFTC’s fight for regulatory jurisdiction over prediction markets.
- The agency is also investigating whether Polymarket violated its 2022 settlement agreement by failing to adequately block U.S. users from its offshore platform.
