Key Insights
- The CFTC lawsuit challenges Utah’s actions against registered prediction markets.
- Utah is the tenth state named in CFTC litigation, The Block reported.
- CME’s separate case concerns the CFTC’s approval of Kalshi’s Bitcoin perpetual futures contract.
The Commodity Futures Trading Commission (CFTC) has sued Utah to block state efforts to shut down CFTC-registered contract markets.
Announced October 27, the case concerns prediction markets and the limits of state enforcement. Utah had filed civil enforcement actions in state court against CFTC-regulated markets and other businesses.
The Commission says Utah’s use of state law conflicts with Congress’s decision to preempt state law.
CFTC Challenges Utah’s Actions Against Prediction Markets
The lawsuit follows Utah’s civil cases against federally registered markets and other businesses. The CFTC says Utah’s actions would restrict the operation of CFTC-registered exchanges. Its legal challenge seeks to block those state efforts.
The Commission argues that Utah’s restrictions obstruct Congress’s decision to place these markets under federal oversight.
CFTC Chairman Michael S. Selig described Utah’s actions as an effort to shut down prediction markets across a wide range of markets. He said event contracts serve hedging and investment purposes. They also provide the public with information about possible future events, according to Selig’s statement.
The CFTC says Congress assigned it sole responsibility for overseeing these markets. Selig also cited the agency’s expertise and responsibility for defending its exclusive jurisdiction over commodity derivatives. The Commission said it would protect federal sovereign interests when a state challenges the lawful operation of a derivatives exchange.
Nine Other States Feature in CFTC Litigation
Utah is the latest state involved in the Commission’s legal actions over prediction market jurisdiction. The CFTC has also initiated proceedings against Arizona, Connecticut, Illinois, New York, Wisconsin, Minnesota, Rhode Island, New Mexico, and Kentucky. With Utah included, the litigation involves ten states.
The CFTC announcement states that the Commission has filed briefs in four federal courts of appeals and one state supreme court. It describes the Utah lawsuit as part of its effort to maintain exclusive jurisdiction over CFTC-registered prediction markets.
The Block also reported that Utah became the tenth state targeted in the CFTC’s litigation. The Commission’s announcement says it will defend federal interests if states challenge the lawful operation of derivatives exchanges.
CME Dispute Concerns Kalshi Futures Approval
Separately, CME has opposed the CFTC’s attempt to dismiss a lawsuit over U.S. cryptocurrency perpetual futures. The exchange filed its response on October 2 in federal court in Washington. The case concerns the Commission’s May approval of Kalshi’s Bitcoin perpetual futures contract.
Jake Chervinsky, chief executive officer of the Hyperliquid Policy Center, criticized CME’s latest filing. He said it did not adequately answer arguments involving competitor standing and the Commodity Exchange Act’s zone of interests.
This dispute concerns CME’s challenge to the CFTC’s Kalshi contract approval. Meanwhile, the Utah case centers on state enforcement actions against registered markets.
