United States and CFTC sue Utah seeking to halt its gambling case against Kalshi, as OG.com files its own suit

The United States and the Commodity Futures Trading Commission have sued the State of Utah and its Attorney General, Derek Brown, seeking to stop the state enforcing its gambling laws against CFTC-regulated prediction markets. The complaint was filed on 26 October in the US District Court for the District of Utah, Central Division, and is Case No. 2:26-cv-01055-DBP on the court docket. The CFTC announced it on 27 October. The claims below are allegations made in the complaint; the court has not ruled on them.

“Utah seeks to shut down prediction markets across a wide variety of markets,” said CFTC Chairman Michael S. Selig. “Congress entrusted the CFTC to be the federal regulator with sole responsibility to oversee these markets.” The CFTC said it has also started legal proceedings against nine other states and has filed briefs in four federal courts of appeal and one state supreme court.

What Utah is doing

The federal suit responds to the case Utah filed on 20 October (Brown v. KalshiEX Inc., No. 260908356) in the Third Judicial District Court for Salt Lake County, which we reported on 24 October. The defendants there are Kalshi, Inc., KalshiEX LLC, Kalshi Klear Inc., Kalshi Klear LLC, Kalshi Trading LLC, Susquehanna International Group LLP and Susquehanna Government Products LLLP.

According to the federal complaint’s summary of the state case, Utah alleges that Kalshi’s event contracts are gambling under several sections of the Utah Code, that the market makers (Kalshi Trading and the two Susquehanna firms) breached the state’s election-betting law, and that the conduct is a public nuisance. The complaint says Utah seeks to stop transactions in categories including “Elections,” “Politics,” “Culture,” “Sports” and “Mentions”. It quotes the state’s claim that “Kalshi’s online gambling bets are indistinguishable from the bets offered by a traditional sportsbook.”

Kalshi is not a party to the federal case. The complaint names KalshiEX (the DCM) and Kalshi Klear LLC (the clearing house) as non-parties.

What the federal government is asking for

The complaint has a single count under the Supremacy Clause. It argues that the contracts Utah is targeting are swaps under the Commodity Exchange Act, and that Utah’s gambling statutes, its election-betting law, its public nuisance statute and common law are expressly, field and conflict preempted “as applied to the trading of event contracts listed on CFTC-regulated DCMs”.

It asks the court for:

• a declaration that Utah state laws are preempted and invalid “as applied to transactions listed, offered, or executed on CFTC-regulated DCMs”; and
• a preliminary and permanent injunction barring the state and its officials “from investigating CFTC-regulated entities and their affiliates and partners for violations of, or enforcing, Utah state laws” as applied to those transactions.

The complaint says Utah’s case “threatens to wipe out the operation of CFTC-regulated exchanges within the State”. It says the pending case against Kalshi, “as well as any future enforcement actions or investigations against federally regulated DCMs and related entities, must be enjoined immediately”.

Two conflict arguments are aimed at how the markets work. The complaint argues the CFTC’s impartial-access rule for DCMs (17 CFR 38.151(b)) would be breached if exchanges had to refuse Utah residents. It also says state gambling law could be used “to collaterally attack a DCM’s self-certifications”, which would undermine a process in which the Commission alone can order a contract taken down. It warns that DCMs “would face the prospect of 50 regulators across the country”.

The complaint also points to the CFTC’s own rulemaking. It says that if the CFTC and SEC’s proposal to define sports, politics, weather and culture event contracts as swaps becomes final, that “would provide an independent basis” to treat the contracts Utah is targeting as swaps. It also cites the Third Circuit’s decision in KalshiEX v. Flaherty, and the Ninth Circuit’s August decision in KalshiEX v. Assad for the point that the Act “expressly preempts state laws regulating swaps ‘traded or executed on’ a DCM”.

OG.com files separately

North American Derivatives Exchange, Inc., which trades as OG.com Prediction Markets, filed its own complaint in the same court on the same day (Case No. 2:26-cv-01056-DBB). It names the Attorney General and three senior officials in his office. The complaint does not say Utah has brought any action against OG.com; the exchange argues that the Kalshi case and the state’s public statements mean “there is a concrete and imminent threat” that the state will take the same action against it.

OG.com says it has been a CFTC-regulated DCM since 2004 and lists event contracts, including sports contracts. The complaint says the exchange launched OG.com in February 2026 as a separate platform for its event contracts. OG.com asks for a declaration that Utah’s gambling laws are preempted as applied to it, and for a permanent injunction.

Why it matters

The CFTC says it has started legal proceedings against nine other states. The federal complaint lists Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin, but the cases it cites for eight of those were brought by the United States, while the Rhode Island case it cites, KalshiEX LLC v. Furcolo, was brought by Kalshi against the state’s regulators. OG.com’s complaint describes eight federal suits and says the CFTC moved to intervene in Kalshi’s Rhode Island case. The federal complaint also says preliminary injunctions against state enforcement have been entered in Arizona, Illinois and Minnesota.

The relief sought here is wider than stopping one case. It would cover investigations of exchanges’ “affiliates and partners”. That matters for market makers: Utah has named two Susquehanna entities and Kalshi’s own trading affiliate alongside the exchange, so firms providing liquidity, and not only the venues, face state claims.

Courts have not all agreed. The Sixth Circuit ruled against Kalshi in the Ohio and Tennessee cases in September, and the federal complaint does not mention that decision. In Assad, the Ninth Circuit upheld the dissolution of Kalshi’s preliminary injunction against Nevada’s regulators, finding that Kalshi had not shown that the Act was likely to preempt Nevada’s gaming rules as applied to its sports contracts. Utah has also won in federal court: according to the Attorney General’s announcement of the state case, a federal judge granted summary judgment to Utah in August in Kalshi’s own suit against state officials, and the Tenth Circuit on 8 September refused Kalshi’s request to block enforcement pending appeal. That appeal is pending.

Utah’s position

As of 27 October the docket showed no filing by Utah in the federal case, and we found no statement on it from the Attorney General’s office. Announcing the state case, Brown said: “Kalshi runs an online casino in Utah and calls it a prediction market. That violates Utah law.” No court has yet ruled on either federal complaint.

What we are watching

• Whether the United States or OG.com files for a preliminary injunction, and when a hearing is set.
• Utah’s response, and whether the state case against Kalshi and Susquehanna is paused.
• Comments on the CFTC’s event-contracts-as-swaps proposal, due 18 November, which the complaint now relies on.