CFTC Sues Utah Over State Efforts to Shut Down Prediction Markets

The Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Utah to block the state’s efforts to shut down CFTC-registered contract markets, escalating a dispute over federal authority over prediction markets and derivatives exchanges. The commission said the action follows Utah’s decision to bring civil enforcement proceedings in state court against CFTC-regulated markets and other businesses. According to the CFTC, Utah’s restrictions obstruct Congress’s decision to pre-empt state law in areas governed by the federal derivatives regulator. The commission said its lawsuit seeks to protect the lawful operation of CFTC-registered markets and maintain its exclusive jurisdiction over commodity derivatives. CFTC Chairman Michael S. Selig said Utah was seeking to shut down prediction markets covering a wide range of markets. He said event contracts serve not only hedging and investment purposes but also provide information about the potential outcomes of future events. Selig added that Congress had assigned the CFTC sole responsibility for overseeing those markets. The commission said the Utah lawsuit forms part of a broader legal effort to defend its authority. The CFTC has also initiated proceedings against nine other states and filed briefs in four federal courts of appeal and one state supreme court. The cases could determine how state enforcement powers interact with the federal regulatory framework for CFTC-registered prediction markets and other contract markets.