The United States and the Commodity Futures Trading Commission (CFTC) have sued Utah and Attorney General Derek Brown in federal court, seeking to stop state enforcement of gambling laws against event contracts traded on federally regulated exchanges.
The complaint was filed in the US District Court for the District of Utah on October 26. It follows Utah's October 20 state-court action against Kalshi-related and Susquehanna companies, which alleges Kalshi offered illegal bets on sports, elections and other outcomes to Utah residents. Kalshi is not a defendant in the new federal case.
Federal lawyers argue that the Commodity Exchange Act gives the CFTC exclusive authority over swaps traded on designated contract markets. They say Utah's targets are such contracts and that applying state gambling law to their listing or trading conflicts with the federal system. Their sole count invokes the Constitution's Supremacy Clause. The court has yet to assess those claims.
The requested declaration would apply to transactions listed, offered or executed on CFTC-regulated designated contract markets. The government also asks for preliminary and permanent injunctions preventing Utah and its officials from investigating regulated entities, their affiliates and partners or enforcing state laws against those transactions. It seeks costs and fees. The filing itself grants no relief.
The dispute follows a separate Kalshi case in Utah. In August, US District Judge Robert Shelby granted summary judgment to the state, finding that federal commodities law did not override its gambling restrictions on Kalshi's sports contracts.
Kalshi appealed and the Tenth Circuit declined an emergency request to pause enforcement in September. Utah's Attorney General said on October 20 that the appeal remained pending.
The federal complaint points to injunctions in other jurisdictions that have restrained state enforcement against CFTC-regulated exchanges.
The new case puts the regulator's own authority directly before a Utah court while the state's action against Kalshi continues. Its outcome may decide whether Utah can apply its gambling statutes to federally supervised event-contract markets.
Utah's October 20 state-court complaint against Kalshi alleged the platform collected $30.6m to $61.2m in local trading fees, while residents lost $5.5m on wagers.
Utah's constitution bars its legislature from authorizing gambling, a provision its Attorney General cites in defending the state's restrictions
