The federal government is escalating its fight with Utah over sports prediction markets, asking a federal judge to stop the state from pursuing criminal and civil enforcement actions against Kalshi. The Commodity Futures Trading Commission (CFTC) and Department of Justice filed an emergency motion on October 29, 2026, seeking to prevent Utah from applying its gambling laws to federally regulated event contracts.
The request follows Utah’s decision to file 14 criminal charges against Kalshi and its co-founders, creating a potentially significant legal showdown over whether states can prohibit sports prediction markets operating under federal oversight.
CFTC Seeks Emergency Injunction Against Utah
The CFTC and federal government initially sued Utah on October 26, challenging the state’s efforts to restrict Kalshi’s operations. Three days later, federal attorneys requested a temporary restraining order and preliminary injunction that would halt Utah’s enforcement proceedings.
Federal regulators argue that the Commodity Exchange Act gives the CFTC exclusive authority over event contracts traded on federally designated exchanges. Under that interpretation, Utah cannot independently classify those contracts as illegal gambling products.
The proposed injunction would extend beyond Kalshi and could prevent Utah from pursuing similar investigations or enforcement actions against other CFTC-regulated exchanges and their affiliated businesses.
Utah Files 13 Felony Charges Against Kalshi
Utah Attorney General Derek Brown filed criminal charges against Kalshi and co-founders Tarek Mansour and Luana Lopes Lara on October 28, alleging the platform illegally promoted online gambling.
The charges include 13 felony counts and one misdemeanor, stemming partly from an undercover investigation in which a state investigator placed sports-related wagers through Kalshi.
According to Associated Press reporting, Utah maintains that federal registration does not exempt prediction market operators from state gambling restrictions.
Utah has consistently opposed legalized sports wagering, and Utah sports betting laws do not authorize domestic sportsbooks or online sports gambling.
State officials argue that contracts tied to football, baseball, and other sporting events function like traditional wagers regardless of how operators describe them.
Federal and State Governments Disagree Over Betting Authority
The central dispute concerns whether sports prediction contracts should be regulated as financial derivatives or gambling products. Kalshi maintains that its customers trade event contracts with one another through a federally regulated exchange, distinguishing its business model from conventional sportsbooks.
Utah disagrees, arguing that allowing customers to risk money on sporting outcomes constitutes gambling under state law. The disagreement has implications extending far beyond Utah. Across the country, state sports betting regulations establish licensing requirements, consumer protections, and restrictions that conventional sportsbooks must follow.
If prediction market operators can offer comparable sports contracts under federal oversight, states could struggle to enforce those requirements against the platforms.
What Happens Next in the Kalshi Court Battle?
U.S. District Judge Robert Shelby has scheduled a November 6 hearing-related status conference to address the federal government’s lawsuit and emergency motion. As of November 2, the court has not granted the requested injunction.
The upcoming proceedings could help determine whether Utah can continue pursuing its criminal prosecution while federal regulators challenge the state’s authority.
A ruling favoring the CFTC could strengthen prediction market operators’ arguments against state restrictions, while a decision supporting Utah could encourage similar enforcement actions elsewhere.
With competing interpretations of federal commodities law and state gambling authority, the dispute could eventually require resolution by higher federal courts, potentially including the U.S. Supreme Court.
