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Utah has never been shy about its stance on gambling, so when prediction market apps began gaining traction, it was only a matter of time before state leaders weighed in.
Gov. Spencer Cox did more than offer an opinion. He labeled the platforms “gambling—pure and simple” and promised to fight them in court. That promise is now a reality. What began as pointed social media comments has evolved into a legal battle between Utah officials and federal regulators over who controls these fast-growing markets.
CFTC claims exclusive oversight
The conflict intensified after Commodity Futures Trading Commission (CFTC) Chairman Michael S. Selig publicly defended prediction markets. Selig announced the agency would file a friend-of-the-court brief supporting federal jurisdiction over “event contracts,” which the CFTC classifies as derivatives under the Commodity Exchange Act.
Selig’s argument is straightforward: Event contracts function as swaps, allowing users to speculate on future conditions without owning the underlying asset. From his perspective, that places them squarely under federal commodities law. He also warned that state-level bans could undermine financial innovation and conflict with congressional intent established after the 2008 financial crisis.
Cox challenges ‘financial hedge’ classification
Cox is not buying the federal explanation. He has publicly questioned how contracts tied to metrics like sports statistics fall under federal derivatives authority. In his view, labeling a bet a “swap” does not transform it into a financial hedge.
According to coverage by Deseret News, the governor has also framed the issue as a moral one. Utah’s constitution prohibits gambling, and Cox has repeatedly argued that easy-access betting harms families and young men. He has vowed to use every available tool to keep these platforms out of the state.
Kalshi files preemptive lawsuit against Utah
Rather than waiting for the state to act, Kalshi made the first move. The company filed a complaint in federal court seeking an injunction to prevent Utah from taking enforcement action against it. The filing argues that state leaders have made their intent to block operations clear.
This is not Kalshi’s first legal challenge. The company has already won injunctions in Tennessee and New Jersey after judges agreed that the CFTC holds exclusive authority over its event contracts. Similar disputes are currently unfolding in the 3rd, 4th, and 9th U.S. Circuit Courts of Appeals.
Surging trading volumes intensify scrutiny
Prediction markets are no longer a niche industry. Monthly trading volume reportedly surged from approximately $100 million at the start of 2024 to more than $13 billion by the end of 2025.
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Supporters argue these markets provide valuable forecasting data and legitimate hedging opportunities for businesses.
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Critics counter that billions of dollars flowing into contracts tied to sports and politics is simply gambling dressed in financial jargon.
Utah moves to tighten anti-gambling laws
Utah lawmakers are providing the governor with additional ammunition through HB243. The bill is designed to clarify that “proposition bets”—wagers tied to individual player performances or specific in-game events—constitute gambling under state law.
The combination of executive rhetoric, pending legislation, and Kalshi’s preemptive lawsuit sets the stage for a landmark clash. The outcome will likely determine who ultimately controls prediction markets in the U.S.: state governments with strict anti-gambling mandates or federal regulators claiming exclusive oversight.
