This week's story Rules & policy
Utah files criminal charges against Kalshi, a day after the CFTC sued the state over prediction markets
What happened. On 28 October Utah filed criminal charges against Kalshi and two of its executives for allegedly promoting illegal online gambling, The Block reported. On 27 October the CFTC had sued Utah over prediction markets, The Block reported.
Why it matters. The cases test whether event contracts on CFTC-registered exchanges are federally regulated derivatives or gambling states can ban. Kalshi called the charges "a crazy overreach", The Block reported.
- Utah's attorney general, Derek Brown, said "being federally registered doesn't put a company above the law", The Block reported.
- The 14 counts rest on 12 sports wagers an undercover state agent placed on Kalshi in September, Unchained and Decrypt reported.
- Federal appeals courts have split, and New Jersey has asked the Supreme Court to decide, Decrypt reported.
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What happened. On 27 October the US Commodity Futures Trading Commission (CFTC) sued Utah and its attorney general, Derek Brown, in federal court in Utah, saying the state is intruding on its jurisdiction over prediction markets, The Block reported; it is the tenth state the CFTC has sued, The Block and Decrypt reported. On 28 October Utah filed criminal charges against Kalshi and two of its executives for allegedly promoting illegal online gambling, The Block reported. The 14 counts rest on 12 sports wagers an undercover state agent placed on Kalshi in September, Unchained and Decrypt reported. Kalshi called the charges "a crazy overreach" and said it would fight them in court, The Block and Decrypt reported.
Why it matters. The cases test whether event contracts on CFTC-registered exchanges are federally regulated derivatives or gambling that states can ban. "Congress entrusted the CFTC to be the federal regulator with sole responsibility to oversee these markets," CFTC Chair Michael Selig said, while Brown said "being federally registered doesn't put a company above the law", The Block reported. Federal appeals courts have split: the Third Circuit ruled against New Jersey in April, while the Sixth and Ninth Circuits sided with Ohio, Tennessee and Nevada, and New Jersey has asked the Supreme Court to decide, Decrypt reported.
- The charges are 12 counts of online gambling promotion, a third-degree felony, one per wager; one second-degree felony count of pattern of unlawful activity; and one misdemeanour count of gambling promotion, Unchained and Decrypt reported.
- The agent opened an account in September with a Utah address and confirmed his location before trading, putting $4 to $30 on each trade across football, soccer, baseball and hockey games, Unchained reported, citing the charging declaration.
- The charges follow Utah's civil suit of 20 October against Kalshi and two Susquehanna trading firms over bets on sports, elections and politics, The Block reported.
- In August a federal judge rejected Kalshi's bid to stop Utah enforcing its gambling laws, and the Tenth Circuit denied Kalshi an injunction in September, Decrypt and Unchained reported.
- The CFTC's earlier suits named Arizona, Connecticut, Illinois, New York, Wisconsin, Minnesota, Rhode Island, New Mexico and Kentucky, The Block reported.
Read the originals (6), usually in their own language
- Utah files criminal charges against Kalshi, executives over alleged illegal gambling · The Block
- CFTC sues Utah as battle over prediction market regulation intensifies · The Block
- CFTC sues Utah to block action against prediction markets · Cointelegraph
- Utah Files Felony Charges Against Kalshi, Co-Founders Over Sports Bets · Decrypt
- Kalshi Slapped With Criminal Charges in Utah Over a State Agent’s Sports Wagers · Unchained
- CFTC Sues Utah to Block Prediction-Market Enforcement · The Defiant