Utah set to block prediction markets as state-federal tensions rise

CFTC Chair Michael Selig has said that the agency has authority over prediction markets like Kalshi and Polymarket and warned it will defend that jurisdiction in court if challenged.

The US state of Utah is set to block prediction market platforms such as Kalshi and Polymarket, escalating a growing dispute between state regulators and federal authorities over how the industry should be regulated.

On Wednesday, Utah’s HB243 (Gambling Revisions) bill was sent to the governor’s desk after passing the Utah House on Feb. 10 and clearing the Senate on Feb. 27. The bill defines “proposition betting” as gambling. Proposition bets are wagers on individual events within a game, such as how a specific athlete performs or whether a team reaches a certain statistic, rather than the final outcome of the game itself.

The goal of the legislation is to prevent companies from offering sports-related prediction or prop betting in Utah, including through platforms that label themselves as prediction markets rather than sportsbooks.

Governor Spencer Cox said he plans to sign the legislation, according to a Thursday report by the Associated Press. “We are putting a casino in the pocket of every single American, and they are targeting especially young people,” Cox reportedly said. “It is really awful what they are doing, and we are going to make sure this doesn’t happen in our state,” he added.

Related: Kalshi suffers court loss in Ohio over sports betting lawsuit

In February, Kalshi sued Utah, asking a federal judge to block the state from enforcing its gambling restrictions against the platform after the Utah Senate Business and Labor Committee unanimously approved the HB243 bill.

Kalshi argued its event contracts are federally regulated derivatives, not gambling. The company said the Commodity Futures Trading Commission (CFTC) has exclusive authority over these markets under the Commodity Exchange Act, meaning states like Utah cannot ban them.

On Wednesday, Kalshi also sued Iowa, claiming it did so because there was a risk of an impending enforcement action. The move comes as an Ohio federal judge on Monday denied Kalshi’s request to block state regulators from enforcing gambling laws against its sports event contracts.

Related: Kalshi sued over Khamenei prediction market ‘death carveout’

The CFTC has asserted that it holds regulatory authority over prediction markets. “To those who seek to challenge our authority in this space, let me be clear, we will see you in court,” Chairman Michael Selig said recently.

Speaking at an industry conference in Florida on Monday, Selig also said prediction markets could serve as powerful tools for discovering information about future events. He described well-functioning prediction markets as “truth machines,” arguing that when participants back their views with money, markets can generate transparent and accountable signals that may be more reliable than traditional opinion polls.

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Source: CoinTelegraph