CFTC intervention comes after Utah sued Kalshi for skirting state gambling prohibition
The Commodity Futures Trading Commission (CFTC) is suing to stop Utah from banning certain prediction market event contracts.
The CFTC said Tuesday that it has filed suit against Utah to prevent the state from restricting the functioning of CFTC-registered exchanges.
The legal action by the CFTC is in response to Utah’s lawsuit against Kalshi, in which the state accuses the prediction markets platform of causing a public nuisance by skirting the state’s 130-year-old gambling ban.
CFTC chairman Michael Selig said that Utah is trying to shut down event contracts across a wide variety of markets.
“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,” Selig explained. “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 CFTC has now initiated legal proceedings against ten states in an effort to enforce its jurisdiction over predictions markets. The majority of US states consider prediction markets to be a form of gambling and subject to state gambling laws.