The US Commodity Futures Trading Commission has sued Utah to stop it enforcing its gambling ban against Kalshi, while the state has filed criminal charges against the prediction-market operator and two executives. The parallel cases put the dispute in state and federal court at once.

Kalshi had already sued Utah in February, trying to block the state from enforcing its gambling laws against the company. Utah responded last week with its own civil case, seeking to bar Kalshi from offering contracts on sports, elections, politics and other events.

Federal preemption is now the core dispute

Kalshi is a prediction market that runs through a federally regulated financial exchange overseen by the CFTC. The agency says the contracts it offers are swaps under the Commodity Exchange Act, and that federal law gives it exclusive authority over them.

Utah says the platform is still gambling. Attorney General Derek Brown has said that calling it a prediction market does not change what it is, and that federal registration does not put a company above state law.

The CFTC wants the court to dismiss Utah’s enforcement case and declare that the state’s anti-gambling laws cannot be used against federally regulated contract markets. The case is being heard in the same US district court that ruled for Utah in August, when Judge Robert Shelby found federal law did not block the state from enforcing its anti-gambling rules. In September, the Tenth Circuit denied Kalshi’s emergency request to block enforcement while its appeal continues.

Utah adds criminal charges

On Wednesday, Utah filed criminal charges against Kalshi and its co-founders, chief executive Tarek Mansour and chief operating officer Luana Lopes Lara. The attorney general’s office said Kalshi kept operating in Utah despite the federal ruling.

The charging documents are described differently in separate reports. The Guardian said the case includes 13 counts of violating Utah’s gambling prohibition and one count tied to profiting from illegal activity. KSL reported that prosecutors charged KalshiEx, LLC, with a second-degree felony pattern-of-unlawful-activity count, 12 third-degree felony counts of online gambling promotion and a class A misdemeanor for general gambling promotion.

According to KSL, an undercover state agent opened an account on September 13 and was able to place wagers on 12 games after repeatedly confirming a Utah location. The attorney general’s office did not immediately say what penalties it would seek.

A wider court battle over prediction markets

Kalshi says prediction markets belong under federal jurisdiction rather than state gambling law. Utah says the platform’s event contracts are gambling, regardless of how the company labels the product.

The CFTC says it has already sued nine other states over similar disputes, making Utah the 10th state named in this wider fight. Ars Technica said the split between federal appeals courts makes Supreme Court review likely.