{"id":8575,"date":"2026-10-28T21:23:11","date_gmt":"2026-10-28T21:23:11","guid":{"rendered":"https:\/\/propernews.co\/?p=8575"},"modified":"2026-10-28T21:23:11","modified_gmt":"2026-10-28T21:23:11","slug":"us-agency-has-sued-10-states-for-trying-to-stop-gambling-on-prediction-markets","status":"publish","type":"post","link":"https:\/\/propernews.co\/?p=8575","title":{"rendered":"US agency has sued 10 states for trying to stop gambling on prediction markets."},"content":{"rendered":"<p>The ongoing regulatory and legal battle over the classification of online prediction markets has escalated dramatically, as the federal government aggressively asserts its authority over state-level anti-gambling statutes. The United States Commodity Futures Trading Commission (CFTC) has filed a federal lawsuit against Utah, making it the tenth state targeted by the federal agency in a coordinated effort to protect federally registered prediction platforms like Kalshi from state enforcement actions. <\/p>\n<p>This latest legal maneuver highlights a profound jurisdictional conflict between federal oversight of commodity derivatives and traditional state-level governance of gaming and wagering. At the heart of the dispute is whether prediction markets\u2014which allow users to wager on real-world events, including political elections, macroeconomic indicators, and sports outcomes\u2014constitute federally regulated financial derivatives or illicit online gambling operations subject to state bans.<\/p>\n<p>The Escalation in Utah and the Federal Response<\/p>\n<p>The immediate catalyst for the CFTC\u2019s lawsuit against Utah was a civil enforcement action initiated by Utah Attorney General Derek Brown. Last week, Utah filed a state-level lawsuit against Kalshi, seeking an immediate injunction to prohibit the platform from offering contracts related to sports, elections, and other public events. Utah authorities argue that Kalshi operates an unregulated online casino under the guise of a prediction market, a direct violation of state statutes.<\/p>\n<p>Utah holds a uniquely stringent position regarding gaming. It is one of only two states in the nation where a ban on gambling is explicitly enshrined in the state constitution. For more than a century, Utah\u2019s legal framework has maintained a strict zero-tolerance policy toward betting of any kind. <\/p>\n<figure class=\"article-inline-figure\"><img decoding=\"async\" src=\"https:\/\/cdn.arstechnica.net\/wp-content\/uploads\/2026\/09\/kalshi-1152x648-1788462763.jpg\" alt=\"Trump admin sues Utah to save Kalshi from the state&apos;s total ban on gambling\" class=\"article-inline-img\" loading=\"lazy\" \/><\/figure>\n<p>However, the Trump administration\u2019s CFTC contends that state-level crackdowns infringe upon exclusive federal oversight. In its official complaint, the commission stated that Utah\u2019s attempts to restrict CFTC-registered contract markets directly obstruct Congress\u2019s intent to federally preempt state laws concerning commodity derivatives and swaps. Consequently, the federal agency stepped in to block Utah\u2019s enforcement efforts, setting up a high-stakes legal showdown in the exact federal district court where Utah had previously prevailed against Kalshi.<\/p>\n<p>A Timeline of Conflict: How the Prediction Market Battle Unfolded<\/p>\n<p>To understand the current multi-state litigation, it is necessary to examine the rapid evolution and legal friction surrounding event-contract platforms over the past year:<\/p>\n<ul>\n<li>February: Kalshi initiates a preemptive federal lawsuit against Utah in an effort to block the state from bringing enforcement actions against its prediction market platform.<\/li>\n<li>April: The United States Court of Appeals for the Third Circuit rules that New Jersey cannot regulate sports-related prediction markets, determining that such contracts qualify as exempt swaps under federal law.<\/li>\n<li>August: US District Judge Robert Shelby rules in favor of Utah, granting the state&#8217;s motion for summary judgment and denying Kalshi&#8217;s preliminary injunction. Judge Shelby concludes that federal law does not preempt Utah&#8217;s ability to enforce its anti-gambling statutes.<\/li>\n<li>August and September: Federal courts in the Sixth and Ninth Circuits rule in favor of Ohio, Tennessee, and Nevada, concluding that sports-related prediction contracts do not qualify as federally protected swaps, thereby empowering state regulators to crack down on platforms.<\/li>\n<li>September 8: The Tenth Circuit Court of Appeals denies Kalshi&#8217;s emergency motion for an injunction pending appeal, allowing state-level legal pressure to mount.<\/li>\n<li>October: Utah files a comprehensive civil enforcement action in state court to permanently shut down Kalshi\u2019s operations within its borders. <\/li>\n<li>October (Late): The CFTC officially files its lawsuit against Utah, marking the tenth state targeted by the federal regulator for attempting to enforce local gambling bans against federally approved exchanges. Concurrently, New Jersey petitions the United States Supreme Court to resolve the widening circuit split, backed by an amicus brief filed by 39 other states and the District of Columbia.<\/li>\n<\/ul>\n<p>The Legal Battleground: Swaps Versus State Gaming Laws<\/p>\n<p>The core of the legal dispute relies on interpretations of the federal Commodity Exchange Act (CEA). Under the CEA, the CFTC holds regulatory jurisdiction over swaps and commodity futures. Kalshi and its supporters argue that event contracts serve vital economic functions, such as hedging financial risk and aggregating crowdsourced intelligence regarding future events. Therefore, they maintain that these instruments fall squarely within the domain of federal financial regulation.<\/p>\n<p>Conversely, state attorneys general argue that the commercial branding of &quot;prediction markets&quot; is a semantic workaround designed to bypass domestic gambling laws. They assert that allowing individuals to place monetary stakes on elections, awards shows, and athletic contests shares all the functional characteristics of traditional sports betting and casino gaming.<\/p>\n<figure class=\"article-inline-figure\"><img decoding=\"async\" src=\"https:\/\/cdn.arstechnica.net\/wp-content\/uploads\/2016\/05\/j.brodkin-11_2.jpg\" alt=\"Trump admin sues Utah to save Kalshi from the state&apos;s total ban on gambling\" class=\"article-inline-img\" loading=\"lazy\" \/><\/figure>\n<p>Federal judges across the country have delivered sharply contradictory rulings on this issue. While the Third Circuit shielded platforms from state intervention in New Jersey, the Sixth and Ninth Circuits have empowered states like Ohio, Tennessee, and Nevada to enforce local anti-gambling laws. This growing division among federal appeals courts has created an untenable regulatory patchwork for operators.<\/p>\n<p>Broader Implications for the Gambling and Financial Industry<\/p>\n<p>The outcome of this jurisdictional war carries massive implications far beyond Kalshi. Major prediction-market competitors, such as Polymarket, are closely watching the litigation. Furthermore, mainstream sports betting giants like DraftKings and FanDuel operate nationwide by leveraging a diverse mix of products, including prediction-market structures in states like Utah where traditional sports betting remains illegal. If the federal government successfully strips states of their authority to regulate these platforms, it could radically transform the availability of online wagering across the United States.<\/p>\n<p>CFTC Chairman Michael Selig emphasized the agency&#8217;s commitment to defending its jurisdiction, noting that event contracts provide critical informational value to the public and that Congress intentionally designated the CFTC as the sole federal overseer of these markets. <\/p>\n<p>Meanwhile, state officials remain defiant. With 40 states and the District of Columbia formally urging the Supreme Court to intervene and clarify whether state gambling laws apply to prediction markets, legal experts widely anticipate that the nation&#8217;s highest court will soon be forced to settle the constitutional boundaries of federal preemption and state sovereignty in the digital wagering era.<\/p>\n<!-- RatingBintangAjaib -->","protected":false},"excerpt":{"rendered":"<p>The ongoing regulatory and legal battle over the classification of online prediction markets has escalated dramatically, as the federal government aggressively asserts its authority over state-level anti-gambling statutes. The United States Commodity Futures Trading Commission (CFTC) has filed a federal lawsuit against Utah, making it the tenth state targeted by the federal agency in a &hellip;<\/p>\n","protected":false},"author":1,"featured_media":8574,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[2614,37,6331,38,3069,6332,1390,2121,6329,36,6330],"class_list":["post-8575","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology","tag-agency","tag-gadgets","tag-gambling","tag-innovation","tag-markets","tag-prediction","tag-states","tag-stop","tag-sued","tag-tech","tag-trying"],"_links":{"self":[{"href":"https:\/\/propernews.co\/index.php?rest_route=\/wp\/v2\/posts\/8575","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/propernews.co\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/propernews.co\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/propernews.co\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/propernews.co\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8575"}],"version-history":[{"count":0,"href":"https:\/\/propernews.co\/index.php?rest_route=\/wp\/v2\/posts\/8575\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/propernews.co\/index.php?rest_route=\/wp\/v2\/media\/8574"}],"wp:attachment":[{"href":"https:\/\/propernews.co\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8575"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/propernews.co\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8575"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/propernews.co\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8575"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}