Key Highlights:
- Utah has escalated its dispute with Kalshi by pursuing criminal enforcement against company executives.
- CFTC Chair Selig is defending the agency’s claim that federal authority over event contracts and prediction markets is exclusive.
- New federal geofencing guidance puts prediction-market platforms between CFTC instructions and conflicting state court orders.
Kalshi Faces Criminal Escalation as CFTC Challenges State Authority
The legal fight over event contracts and prediction markets is intensifying, with Utah pursuing criminal enforcement against Kalshi and its executives while the Commodity Futures Trading Commission (CFTC) expands its challenge to state restrictions. Event contracts allow participants to trade on real-world outcomes, including elections and sporting events. The CFTC classifies those contracts as derivatives subject to federal oversight, while several states view them as similar to sports betting, an area traditionally regulated at the state level.
Selig’s position is that the conflicting interpretations should be resolved by courts and regulators rather than through criminal prosecutions of company founders. He has also argued that the dispute extends beyond Kalshi, warning that a patchwork of state laws could threaten the operational integrity of major financial exchanges, including the New York Stock Exchange (NYSE) and CME.
The CFTC’s Wider Prediction-Market Offensive
Since taking over the agency, Selig has led lawsuits against at least 10 states. The CFTC argues that federal authority over event contracts and prediction markets is exclusive, placing the agency at the center of a constitutional and regulatory clash with state governments.
Research on Selig’s tenure describes a sustained commitment to defending CFTC jurisdiction through litigation that could eventually reach the Supreme Court. In July 2026, the CFTC used emergency authority to direct Kalshi to honor trades in Michigan, even as court orders pointed in the opposite direction.
The conflict expanded on November 5, 2026, when Selig issued interpretive guidance requiring designated contract markets to remove geographic access restrictions within 30 days. Geofencing blocks users based on their location. Prediction-market platforms have used it to exclude states where they face legal challenges, effectively making their products available nationwide except in jurisdictions that object.
Federal Geofencing Guidance Conflicts With State Court Orders
The CFTC guidance says that broad geographic restrictions conflict with impartial-access rules, which require regulated exchanges to treat participants evenly. The position runs counter to state court orders in Michigan and Nevada. As a result, platforms face competing instructions: the federal regulator is telling them to open access, while state courts are telling them to keep certain markets closed.
Utah’s decision to pursue criminal enforcement against executives represents a significant escalation from civil disputes and cease-and-desist letters. It moves the conflict from questions about platform access and regulatory authority toward potential personal legal jeopardy for the people operating prediction-market companies.
Why This Matters
Selig, who was appointed in December 2025, has made exclusive federal jurisdiction a central theme of his tenure. The CFTC’s lawsuits against at least 10 states, its emergency directive involving Michigan and its geofencing guidance all support the same position: that state laws cannot override federal authority over regulated event contracts.
The 30-day compliance period creates an immediate test for prediction-market platforms. Their decisions will show whether they follow the CFTC’s guidance or comply with state court orders in Michigan and Nevada. Meanwhile, the progress of the CFTC’s lawsuits will help determine whether federal courts accept the agency’s claim of exclusive authority.
Utah’s case against Kalshi and its executives is currently the clearest indication of how far states may go to enforce their own interpretation of event-contract regulation. Prediction-market operators therefore remain in an uncertain position: federally regulated and defended by the CFTC, but still exposed to possible state prosecution. Selig has made the agency’s position clear.
Frequently Asked Questions
What are event contracts?
Event contracts allow people to trade on the outcome of real-world events such as elections and sports results. The CFTC treats them as derivatives subject to federal oversight.
Why are states challenging prediction markets?
Several states view event contracts as similar to sports betting, which states have traditionally regulated themselves. That interpretation conflicts with the CFTC’s claim that federal authority over these contracts is exclusive.
What is the CFTC’s geofencing guidance?
Issued by Selig on November 5, 2026, the guidance requires designated contract markets to remove geographic access restrictions within 30 days. It conflicts with state court orders in jurisdictions including Michigan and Nevada.
