CFTC Seeks Restraining Order to Block Utah Criminal Charges Against Kalshi
The CFTC and US government filed an emergency motion on October 29 seeking to block Utah's prosecution of Kalshi after the state brought 14 criminal counts against the firm and its co-founders. The action argues CEA preemption over state gambling laws for CFTC-regulated event contracts. A November 6 hearing before the same judge who previously ruled for Utah will address the restraining order request.
SCCG Take — This direct federal-state clash tests the practical reach of CFTC authority over prediction markets. A narrow ruling could preserve state enforcement tools while a broad injunction would clear a path for wider adoption.
The United States and the Commodity Futures Trading Commission (CFTC) asked a federal judge in Utah to halt the state's criminal and civil cases against prediction market operator Kalshi. The emergency motion for a temporary restraining order and preliminary injunction was filed on October 29 as part of their October 26 federal lawsuit against the State of Utah and Attorney General Derek Brown, asserting that the Commodity Exchange Act (CEA) preempts Utah gambling laws for event contracts listed on CFTC-regulated exchanges.
Federal Preemption Argument and Prior Rulings
The proposed order would bar Utah from any criminal or civil enforcement actions related to event contracts on CFTC-regulated designated contract markets. It would require the state to dismiss or stay pending suits against such markets, their officers and related parties. The federal side contends it is likely to succeed on the preemption claim and would suffer irreparable harm without relief.
Judge Robert J. Shelby scheduled an in-person status conference for November 6 at 1:00 PM. Shelby previously ruled on August 4 that the CEA does not preempt Utah's anti-gambling laws against Kalshi, a decision the Tenth Circuit left in place when it denied an injunction pending appeal on September 8. The CFTC has initiated proceedings against nine other states and submitted briefs in multiple appellate courts. Chairman Michael S. Selig stated that Congress entrusted the CFTC with sole responsibility to oversee these markets. As reported by Gambling Insider, 37 states filed an amicus brief supporting Utah in the Tenth Circuit appeal.
What the November 6 Hearing Will Test
A ruling granting the requested relief would force Utah to halt its enforcement actions while the federal case proceeds. Denial would allow the state criminal and civil matters to continue in parallel. The dispute, which began with Kalshi's February federal suit, now directly pits federal commodities authority against state gambling enforcement in a jurisdiction where the assigned judge has already rejected the preemption theory on the merits. The outcome will signal how far CFTC oversight extends when states treat event contracts as indistinguishable from sports betting.
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