Federal Regulator Sues Utah Over Its Effort to Shut Down Kalshi

The Trump administration has moved to block Utah from enforcing its gambling ban against the prediction market Kalshi. The federal agency that regulates prediction markets, the Commodity Futures Trading Commission (CFTC), has sued the state, making Utah the 10th state the agency has taken to court over the issue.

The dispute follows a lawsuit Utah filed in state court last week. The state is asking a judge to bar Kalshi from offering bets on sports, elections, politics and other events. Utah prohibits gambling, and state officials say Kalshi's product falls squarely within that prohibition.

Utah Attorney General Derek Brown, a Republican, described the company's business in blunt terms. "Kalshi runs an online casino in Utah and calls it a prediction market. That violates Utah law," he said last week. He added that Utah is one of only two states where gambling is also banned under the state constitution. "For 130 years, Utah has been clear: gambling has no place here, and we will enforce our laws," Brown said.

The state-court action is not the first legal clash between the two sides. Kalshi earlier filed a preemptive lawsuit in federal court seeking to stop Utah from enforcing its gambling laws against it, and Utah prevailed in that case. With the state now pressing ahead with its own effort to shut the company down, it must also defend against the CFTC's suit.

In announcing the action on Tuesday, the commission said it was suing to block Utah's efforts to shut down CFTC-registered contract markets using state law. It said the lawsuit follows Utah's decision to file civil enforcement actions in state court against CFTC-regulated markets and other businesses.

The CFTC argued that Utah's approach interferes with the functioning of exchanges it has registered and obstructs a decision made by Congress. In the commission's view, federal law preempts state law in this area, which is the basis for its claim of sole authority over such markets.

The outcome could reach well beyond Kalshi. A Utah win against the company could create problems for its chief prediction-market rival, Polymarket, as well as for sports betting sites such as DraftKings and FanDuel.

Those two sites advertise availability in all US states through a mix of products, including prediction-market platforms in states like Utah. Both are registered with the CFTC, which places them in the same category of federally regulated operators that the agency says Utah cannot target with state gambling laws.