DOJ and CFTC Sue Utah Over State Restrictions on Prediction Markets

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Altay Celikkaya

Content Manager

Updated: 28/10/26

Reading Time: 2 minutes

The US Department of Justice (DOJ) and Commodity Futures Trading Commission (CFTC) have filed a federal lawsuit against Utah, seeking to prevent the state from enforcing gambling laws against federally regulated prediction markets.

The complaint, filed on 26 October 2026 in the US District Court for the District of Utah, names the state and Attorney General Derek Brown as defendants. It follows Utah’s recent enforcement action against Kalshi and other businesses offering event contracts.

US Department of Justice and CFTC challenge Utah's gambling laws in a dispute over prediction market regulation.

Regulation & Compliance

Key Takeaways From the CFTC's Utah Lawsuit

The DOJ and CFTC filed their lawsuit on 26 October, challenging Utah’s enforcement of gambling restrictions against federally registered exchanges.
The federal government argues that the Commodity Exchange Act gives the CFTC exclusive authority over the relevant derivatives markets.
The case follows Utah’s earlier court victory against Kalshi and its latest enforcement action targeting prediction market contracts.
The CFTC is now involved in legal proceedings against ten states over prediction market oversight.

Why Is the CFTC Taking Utah to Court?

Utah filed a state enforcement action against Kalshi and related businesses on 20 October, alleging that their event contracts constitute illegal gambling under state law.

The federal government disagrees with Utah’s authority to restrict transactions offered through CFTC-regulated exchanges.

In its 27 October official announcement, CFTC Chairman Michael S. Selig said:

Utah seeks to shut down prediction markets across a wide variety of markets.

The federal complaint seeks a declaration that federal law overrides Utah’s gambling restrictions when applied to transactions on CFTC-regulated markets. It also requests preliminary and permanent injunctions against relevant state enforcement actions.

The lawsuit does not seek to overturn Utah’s general gambling prohibition or authorise traditional sportsbooks in the state.

Federal Lawsuit Follows Kalshi's Earlier Utah Court Defeat

The latest action follows an August federal court ruling in Utah’s favour. As Ace Alliance previously reported, a federal judge rejected Kalshi’s argument that CFTC registration prevented the state from enforcing its gambling laws against sports event contracts.

The new lawsuit adds the federal government as a plaintiff in the regulatory jurisdiction dispute. It also builds on the CFTC’s earlier legal action against Arizona, Connecticut and Illinois.

What Does the Dispute Mean for Prediction Market Operators?

The outcome could influence how federally regulated prediction market platforms operate across states with different gambling restrictions. For operators and technology providers, the central question is whether CFTC oversight permits nationwide access to event contracts despite conflicting state gambling laws.

The dispute also comes as the regulator works to distinguish traditional sportsbooks from federally regulated derivatives markets.

No final ruling has been issued in the new Utah lawsuit. Until the courts clarify the boundaries between federal and state authority, prediction market operators face continued regulatory uncertainty across the US.