- Washington filed suit against Utah on Monday, less than a week after Utah went after Kalshi in state court.
- Counting Utah, the federal government now has 10 states in court over prediction markets.
- Kalshi, Polymarket US and two other exchanges have filed their own suits against Louisiana, Ohio, Missouri and Utah this month.
SALT LAKE CITY – The prediction market fight is no longer just platforms against states. The federal government sued Utah on Monday, and it now has 10 states in court for trying to keep federally regulated exchanges out.
The U.S. government and the Commodity Futures Trading Commission filed the complaint in federal court in Salt Lake City. Derek Brown, Utah’s attorney general, had sued Kalshi and trading firm Susquehanna in state court on Oct. 20. Utah alleges Kalshi has offered gambling bets to residents since at least September 2024 and calls them “indistinguishable” from what a sportsbook sells.
Utah bans gambling outright, so there’s no Utah sports betting for those contracts to compete with. The state’s suit seeks to block Kalshi’s sports, election and cultural markets and recover the fees it collected from Utah users.
Utah has already beaten Kalshi once. A federal judge in Salt Lake City ruled for the state in August in a suit Kalshi filed in February, and the Tenth Circuit has refused to give Kalshi emergency relief while it appeals.
The CFTC’s position is that event contracts count as swaps, a category federal commodities law leaves to federal regulators alone. Letting each state step in, the agency wrote, would leave exchanges answering to “50 regulators” nationwide.
Utah isn’t the first.
The complaint lists the federal government’s earlier suits:
- Arizona, Connecticut and Illinois (April 2)
- New York (April 24)
- Wisconsin (April 28)
- Minnesota (May 19)
- New Mexico (June 12)
- Kentucky (June 23)
- Rhode Island (May 21)
Judges have sided with Washington so far in Minnesota, Illinois and Arizona. In Wisconsin, a federal judge found the CFTC hadn’t shown it was likely to win, and that appeal is now with the Seventh Circuit.
The Illinois ruling came Oct. 2, when Judge Martha Pacold of the federal court in Chicago found the state likely can’t force Kalshi to get a sports wagering license or bring gambling charges over its covered contracts. She held off on the state’s new fee on prediction markets, and the wording of her order is due Thursday.
Platforms File Their Own Suits
Where Washington hasn’t stepped in yet, the exchanges are going to court themselves, mostly in states that already have legal sports betting:
- Kalshi sued Liz Murrill, Louisiana’s attorney general, and the state Gaming Control Board on Oct. 23, pointing to a board advisory that called sports event contracts illegal gambling and a law that kicked in Aug. 1.
- Polymarket US filed its own suit against Murrill on Tuesday, in a state that already has Louisiana sports betting both online and in person.
- Polymarket US sued Ohio Attorney General Andy Wilson and the Ohio Casino Control Commission on Oct. 16, arguing the state’s in-state server and office rules for sportsbooks are protectionist.
- Two exchanges, Nadex and Ludlow, sued Missouri Attorney General Catherine Hanaway the same day.
- Nadex also sued Brown in Utah on Monday.
The stakes are highest for bettors in states with no sportsbooks at all. Minnesota has never legalized Minnesota sports betting, but a federal injunction already blocks Minnesota from using its gambling laws on CFTC-registered exchanges. That’s the same protection the CFTC now wants in Utah.
The appeals courts are split. Nevada won its case at the Ninth Circuit, and the Sixth Circuit turned down Kalshi’s request for early relief in Ohio and Tennessee. New Jersey lost to Kalshi at the Third Circuit and has asked the U.S. Supreme Court to step in, with Kalshi’s reply due Nov. 9.
