CFTC and Justice Department Seek to Block Utah’s Charges Against Kalshi
United States.- 6 November 2026 | www.zonadeazar.com The Commodity Futures Trading Commission (CFTC) and the US Department of Justice (DOJ) have asked a federal court to prevent Utah from continuing its criminal and civil enforcement actions against Kalshi, the prediction market platform.
The intervention follows the filing of 14 criminal charges against the company and its co-founders, who have been accused of promoting illegal gambling.
The case intensifies the conflict between federal financial regulation and state gambling laws governing sports-related event contracts.
CFTC Requests Emergency Court Order
The CFTC and Department of Justice have filed a motion seeking a temporary restraining order and preliminary injunction against Utah’s enforcement actions.
The request aims to prevent state authorities from applying gambling laws to event contracts traded on markets supervised by the CFTC.
Federal officials argue that allowing criminal and civil penalties in this context could interfere with their regulatory jurisdiction.
The court has yet to determine whether the requested relief should be granted.
Utah Files 14 Criminal Charges
On 28 October 2026, Utah Attorney General Derek Brown filed 14 criminal charges against Kalshi and its co-founders:
- Tarek Mansour, Co-Founder and CEO.
- Luana Lopes Lara, Co-Founder and Chief Operating Officer.
The charges concern the alleged promotion of illegal gambling through contracts linked to sporting events.
Utah maintains that these products constitute betting and must comply with state gambling restrictions.
The charges remain allegations and do not represent criminal convictions against the company or its executives.
Federal Government Defends Its Jurisdiction
The dispute centres on the legal classification of prediction market contracts.
The CFTC and Department of Justice argue that these instruments qualify as swaps regulated under the Commodity Exchange Act.
Under their interpretation, contracts traded on CFTC-designated markets fall within federal regulatory jurisdiction.
The agencies maintain that a state cannot criminalise transactions belonging to a category of financial products over which Congress has granted a federal regulator exclusive authority.
Utah Defends Its Gambling Laws
Utah authorities maintain a different interpretation.
The state argues that describing event contracts as financial instruments does not remove their potential status as gambling products.
Under this approach, sports prediction platforms must comply with state gambling prohibitions and restrictions.
The dispute had already resulted in an unfavourable ruling for Kalshi in August, when a federal judge denied its request for preliminary relief against Utah’s enforcement actions.
That ruling forms part of the legal background to the current confrontation between state and federal authorities.
DraftKings, FanDuel and Fanatics Suspend Operations
Regulatory pressure has also affected other major companies.
DraftKings Predictions, FanDuel Predicts and Fanatics Markets agreed to halt prediction market trading in Utah.
Their withdrawal reflects the legal uncertainty facing operators offering event contracts linked to sports.
The situation demonstrates that the dispute extends beyond Kalshi and could influence the wider US prediction market industry.
A Nationwide Regulatory Conflict
The confrontation between Utah and federal authorities is part of a broader series of prediction market lawsuits across the United States.
Federal courts have reached different conclusions about the application of state gambling laws to event contracts.
Some decisions have supported Kalshi’s position, while others have upheld states’ authority to enforce gambling restrictions.
The absence of a uniform judicial interpretation increases the possibility that the dispute could ultimately reach the US Supreme Court.
Court Hearing Scheduled for 6 November
Federal Judge Robert J. Shelby has scheduled an in-person hearing for 6 November 2026 to address procedural matters relating to the federal government’s motion.
The requested order could temporarily prevent Utah from continuing enforcement proceedings involving federally supervised event contracts.
However, the court has not yet granted the requested injunction.
The next judicial decision will help determine the immediate scope of Utah’s enforcement powers.
Industry Impact and Next Steps
The intervention by the CFTC and Department of Justice marks a significant escalation in the regulatory conflict surrounding prediction markets.
The dispute extends beyond Kalshi and raises a fundamental question: which authority has jurisdiction over sports-related event contracts in the United States?
With 14 criminal charges filed against Kalshi and its co-founders, the CFTC and Department of Justice are seeking to halt Utah’s enforcement actions and defend federal jurisdiction over prediction markets.
The 6 November hearing represents the next stage in a legal dispute that could establish important precedents for the industry.
Edited by: @fonta
