CFTC and the Justice Department sue Utah to stop its crackdown on Kalshi, the tenth state the regulator has taken to court
The CFTC and the Justice Department have asked a federal court to block Utah from enforcing its gambling, election-betting and nuisance laws against Kalshi and other federally regulated exchanges, a week after Utah sued Kalshi and Susquehanna for up to $61 million. What the complaint asks for, the arguments, the score so far in the other nine states and what comes next.
In this article
The federal government has sued Utah to stop it policing prediction markets. The Commodity Futures Trading Commission and the Justice Department filed a complaint against the State of Utah and Attorney General Derek Brown in the U.S. District Court for the District of Utah on Monday, and the CFTC announced it on 27 October. Utah is the tenth state the regulator has taken to court over prediction markets.
The suit comes a week after Utah sued Kalshi in state court (our report on that case), and on the same day the NBA signed an integrity agreement with the CFTC and named Kalshi and Polymarket its preferred exchanges (NBA deal).
What the complaint asks for
The 33-page complaint (case 2:26-cv-01055) makes a single claim under the Supremacy Clause of the Constitution. It asks the court to:
- block Utah, by preliminary and then permanent injunction, from investigating or taking enforcement action over transactions on CFTC-regulated exchanges, including against the exchanges' affiliates and partners;
- declare Utah's gambling statutes, its ban on election betting and its public-nuisance law invalid as applied to contracts listed or traded on those exchanges;
- award costs.
The argument
The government's case is that event contracts are swaps under the Commodity Exchange Act, so when they trade on a federally designated exchange the CFTC alone regulates them. The complaint argues express, field and conflict preemption, and says the state's action "threatens to wipe out the operation of CFTC-regulated exchanges within the State", as DeFi Rate quoted it. Forcing exchanges to shut out Utah residents, it argues, would also clash with the federal rule that exchanges give impartial access, and would leave the industry facing "the prospect of 50 regulators across the country".
How Utah got here
| Date | Event |
|---|---|
| February 2026 | Kalshi sues Utah officials in federal court to stop gambling enforcement |
| 4 August | Judge Robert J. Shelby rules for Utah: federal law does not preempt its anti-gambling laws |
| 8 September | The Tenth Circuit refuses Kalshi an emergency injunction while it appeals |
| 20 October | Utah sues Kalshi and two Susquehanna entities in state court |
| 26 October | The CFTC and the Justice Department sue Utah |
Utah's state case accuses Kalshi of unlawful gambling, public nuisance, unjust enrichment and civil conspiracy over its sports, election, politics, culture and mention contracts. It estimates that Kalshi collected $30.6–61.2 million in fees from Utah users through 19 October, assuming one to two cents a trade on more than three billion contracts. "Kalshi runs an online casino in Utah and calls it a prediction market. That violates Utah law," Brown said when he filed it. Kalshi says its customers trade with each other on a federally regulated exchange and that states should not control access to it.
Source: CFTC complaint and filings, via DeFi Rate and crypto.news, 27 October 2026
The scorecard in the other states
| State | Status, as reported on 27 October |
|---|---|
| Arizona, Minnesota, Illinois | CFTC won preliminary injunctions |
| Wisconsin | Judge found the CFTC had not shown it was likely to win |
| Kentucky | Pending; supplemental briefs filed 23 October |
| New York | Pending; the state disputes the CFTC's interim rule |
| Connecticut, New Mexico, Rhode Island | Pending |
| Utah | Filed 26 October |
The appeals courts are split too. The Third Circuit sided with Kalshi in New Jersey, the Ninth Circuit ruled against it in Nevada, and the Sixth Circuit refused it preliminary protection in Ohio and Tennessee. New Jersey has asked the Supreme Court to take the question; Kalshi's response is due on 9 November (the NFL's brief in that case).
What it means for traders
Nothing changes overnight: no court has ruled on the new suit, and Utah's federal win against Kalshi stands while the appeal runs. What the case adds is the federal government on Kalshi's side in a state where it has so far lost, and one more front in a fight that now looks headed for the Supreme Court. Where you can trade today: is Kalshi legal? · legal sports betting states.
