The Commodity Futures Trading Commission (CFTC) has initiated legal action against the state of Utah in an effort to defend its claimed exclusive jurisdiction over federally registered prediction markets. This federal intervention comes as Utah has filed 14 criminal charges against the platform Kalshi and its co-founders, alleging violations of state anti-gambling statutes.
On Wednesday, Utah Attorney General Derek Brown announced the filing of charges against Kalshi co-founders Tarek Mansour and Luana Lopes Lara. The indictment includes 12 counts of promoting online gambling, classified as a third-degree felony, one count of a pattern of unlawful activity, a second-degree felony, and a Class A misdemeanor for general gambling promotion. In the accompanying civil lawsuit, the state characterized Kalshi as a "back-alley gambling den." Attorney General Brown emphasized that federal registration does not exempt companies from state law, stating that calling the platform a prediction market does not alter its nature as illegal gambling in Utah.
Brown further noted that a federal court has already ruled that Utah's gambling laws apply to Kalshi, yet the company continued to accept bets from residents of the state. The CFTC responded by suing the state, framing the move as part of its commitment to maintaining sole regulatory authority over registered prediction markets. The commission argues that federal oversight is necessary because event contracts serve not only investment purposes but also provide public information regarding future events.
CFTC Chairman Michael S. Selig stated in a declaration that Congress entrusted the agency with the sole responsibility to oversee these markets. He affirmed that the CFTC possesses the expertise and duty to defend its exclusive jurisdiction over commodity derivatives. Reports indicate that the commission has been actively filing lawsuits against states attempting to charge betting sites, including Kalshi and Polymarket. Both companies reportedly employ Donald Trump Jr., the son of President Trump, as a paid advisor.
Sources: Slashdot.