CFTC Sues Utah Over Its Kalshi Case, in the District Where Kalshi Already Lost

The federal regulator has asked a Utah federal court to halt the state's gambling case against Kalshi and bar any future action against CFTC-registered exchanges. It is suing in a district that granted Utah summary judgment on the same question in August.

• The United States and the Commodity Futures Trading Commission (CFTC) sued the State of Utah and Attorney General Derek Brown in the US District Court for the District of Utah on 26 October
• The complaint pleads one Supremacy Clause count, alleging that the Commodity Exchange Act pre-empts Utah law expressly, by occupation of the field and by conflict, and seeks a declaration and preliminary and permanent injunctions
• It targets Utah's 20 October state court suit against Kalshi and two Susquehanna market makers, which the CFTC says must be enjoined along with any future investigations
• In August, Judge Robert J. Shelby of the same court held that federal law does not pre-empt Utah's gambling ban as applied to Kalshi, a ruling now on appeal to the Tenth Circuit
• The complaint lists actions involving nine other states, including New York; no injunction motion had been filed by 27 October, and nothing has been decided

The CFTC Asks a Federal Court to Stop Utah's Case Against Kalshi

The United States and the CFTC filed a complaint for declaratory and injunctive relief in the Central Division of the District of Utah on 26 October 2026 (United States v. State of Utah, No. 2:26-cv-01055). The defendants are the state and Brown, in his official capacity. The CFTC announced the suit the next day, when Chairman Michael S. Selig said that "Utah seeks to shut down prediction markets across a wide variety of markets" and that Congress had made the CFTC "the federal regulator with sole responsibility to oversee these markets".

The complaint responds to the civil action Brown filed on 20 October in the Third Judicial District Court for Salt Lake County (No. 260908356) against five Kalshi entities, Susquehanna International Group and Susquehanna Government Products. According to the CFTC, Utah seeks to enjoin contracts in categories including elections, politics, culture, sports and mentions, under its gambling statutes, its election wagering ban and public nuisance law. Utah's constitution bars the legislature from authorising "any game of chance, lottery or gift enterprise under any pretense or for any purpose", and the state permits no gambling.

The CFTC alleges that the targeted contracts are swaps under the Commodity Exchange Act, that Kalshi is a designated contract market within the agency's "exclusive jurisdiction", and that Utah law is pre-empted expressly, by occupation of the field and by conflict. It cites the CFTC's impartial access rule, which it says Utah would force exchanges to breach by excluding Utah residents, and warns of "the prospect of 50 regulators across the country". It also points to the interim final rule of 19 October that carves state-licensed sportsbook wagers out of the swap definition, and to a parallel proposal to define event contracts as swaps.

The Irreparable Injury Argument

The complaint argues that the federal government's injury "is irreparable and requires preliminary and permanent injunctive relief", because "Constitutional violations, including Supremacy Clause violations, are always irreparable" and the harm to federal "sovereign interests and regulatory jurisdiction could not be undone after final judgment". It alleges that every enforcement step forces exchanges and clearing houses "to guess whether they are held to the standards of the CFTC and CEA, state regulators, or both". It asks the court to bar Utah from "investigating CFTC-regulated entities and their affiliates and partners" or enforcing state law against transactions on CFTC-regulated exchanges. These are allegations; Utah has not yet answered.

By 27 October the docket showed the complaint, summonses and a notice of related action, and no motion for a preliminary injunction or restraining order. The notice links the case to a suit filed on 26 October by North American Derivatives Exchange, which trades as OG.com Prediction Markets, against Brown and three of his deputies (No. 2:26-cv-01056), seeking a declaration and a permanent injunction. The Block reported that Brown's office did not immediately respond to a request for comment.

The CFTC Is Suing Where Utah Has Already Won

Kalshi sued Utah's governor and attorney general in the same district in February, and on 4 August Shelby granted the state summary judgment, concluding that "the CEA does not preempt Utah's enforcement of its anti-gambling laws against Kalshi". OG.com's complaint says the district court declined to stay that ruling on 14 October and the Tenth Circuit also refused a stay; Brown sued Kalshi six days after the district court's refusal. The CFTC's complaint does not mention the Shelby decision. Its new case is assigned to Magistrate Judge Dustin B. Pead, but binding law is likely to come from the Tenth Circuit's ruling in Kalshi's appeal, and the agency is in effect asking a second judge in the district to reach the opposite answer before that appeal is decided.

The Irreparable Harm Theory Has Already Failed Once

The CFTC made the same argument in Wisconsin, and on 28 July Judge William C. Griesbach of the Eastern District of Wisconsin denied its preliminary injunction motion, finding that it had shown neither likely success on the merits nor irreparable harm. He wrote that the regulated exchanges, "rather than the CFTC, would be the proper plaintiffs" to allege harm from state enforcement. That ruling is on appeal to the Seventh Circuit. The agency has also moved slowly elsewhere: it sued Connecticut in April but sought a preliminary injunction only in September. Until it files a motion in Utah, the state court case proceeds.

Utah Has No Licensed Market for the Carve-Out to Protect

The CFTC's 19 October rule draws a line between state-licensed sportsbooks, which it leaves to the states, and event contracts on its exchanges. In states that license sports betting, that line separates two legal channels. In Utah, which licenses no gambling at all, it separates a federally registered product from a constitutional prohibition, so the dispute is whether any legal channel for sports contracts can exist in the state. That makes Utah the cleanest test yet of the agency's claim to exclusive jurisdiction, because the CFTC cannot present its case as sparing a licensed market. The same pre-emption claim is now being pressed by private exchanges as well, by OG.com in Utah and by Kalshi in Louisiana, across a United States map on which the appeals courts are already split.

The CFTC has chosen to fight in a district that has already handed Utah a final judgment on the same question. Unless it moves quickly for an injunction, the state court and the Tenth Circuit are likely to shape the outcome before this case does.