The legal conflict between the state of Utah and prediction markets is intensifying: a federal judge has set an expedited schedule for a lawsuit brought by the U.S. Commodity Futures Trading Commission (CFTC), while the firm Susquehanna has contested Utah’s characterization of its activities as “gambling.” Meanwhile, Underdog has filed a lawsuit against officials in Missouri; dozens of states have sided with gambling regulators in a federal appeal; and Kalshi is facing legal action linked to its partnership with a Native American tribe in Oklahoma.
Key Developments: Utah Faces Expedited Hearing in CFTC Lawsuit; Susquehanna Challenges “Gambling” Allegations
U.S. District Judge Robert J. Shelby has scheduled a hearing for November 20 to consider a request by the federal regulator—the CFTC—to block Utah from taking enforcement action against prediction markets.
During a case management conference, Judge Shelby established an expedited briefing schedule for the CFTC’s motions seeking a temporary restraining order and a preliminary injunction.
Utah is required to file a motion to dismiss the case by November 10 and must respond to the CFTC’s request for emergency relief by November 11. Additional legal filings are due between November 16 and 19, in preparation for the November 20 hearing.
This federal legal proceeding unfolds as the confrontation between Utah and prediction market operators escalates; notably, in October, Utah filed criminal charges against Kalshi and its co-founders, Tarek Mansour and Luana Lopes Lara. In a separate case challenging Utah’s authority to regulate contracts related to sporting events, Judge Shelby has already ruled against Kalshi—marking the first time a state-level lawsuit has resulted in a substantive ruling against the prediction market operator.
Susquehanna: Market-Making Is Not Gambling
Meanwhile, in a lawsuit filed by Utah in October against Kalshi and two of its market makers, the firm Susquehanna is opposing Utah’s request for a preliminary injunction.
In a court filing—first brought to light by gambling law attorney Daniel Wallach—the firm refutes Utah’s characterization of market makers as “gambling operators.” Susquehanna points out that it provides liquidity by posting orders and executing trades at prevailing market prices, rather than setting odds or accepting wagers from customers. “Unlike a sportsbook, a market maker neither sets odds nor accepts bets from customers,” the filing states.
Wallach also noted that while Susquehanna’s opposition incorporates arguments made by Kalshi—and both parties share legal counsel—Susquehanna maintains that its business activities are independent of Kalshi’s.
Reported by The Daily Wire:
Underdog Sues Missouri Officials
Utah is not the only state facing litigation related to prediction markets. Underdog has filed a lawsuit against Missouri officials, marking the eighth such legal challenge the company has initiated nationwide.
In a legal filing submitted on November 8, Underdog requested that the court block Missouri Attorney General Catherine Hanaway and officials from the Missouri Gaming Commission from enforcing state gambling laws against its federally regulated derivatives business.
The filing cites several contracts, including those concerning the expansion of NBA teams, MLB seasons, collective bargaining negotiations, and the potential sale of an NFL team. Underdog argues that federal commodities law takes precedence over Missouri’s restrictions on gambling.
In September, Missouri issued cease-and-desist orders to Underdog and five other prediction market operators, alleging that they were conducting illegal gambling operations within the state. In late October, Kalshi filed a lawsuit against Missouri; Crypto.com and Novig subsequently filed their own legal complaints.
Prior to this, Underdog had already initiated legal action against local officials in Connecticut, Massachusetts, New Mexico, Ohio, Tennessee, Washington, and Wisconsin.
Attorneys General from multiple states, the American Gaming Association (AGA), and a former chair of the U.S. Commodity Futures Trading Commission (CFTC) are challenging Kalshi at the federal appellate court level.
As prediction market operators and the CFTC continue to challenge state laws, a growing coalition—comprising state attorneys general and gambling industry groups—has submitted amicus curiae (friend-of-the-court) briefs to federal appellate courts.
On November 6, Ohio, Nevada, and 35 other states—along with the District of Columbia and the Northern Mariana Islands—filed an amicus brief with the U.S. Court of Appeals for the Second Circuit, supporting the position taken by the State of New York in its litigation against Kalshi.
Meanwhile, in the U.S. Court of Appeals for the Seventh Circuit, a similar brief supporting the State of Wisconsin in its dispute with the CFTC was filed, backed by 38 states, the District of Columbia, and the Northern Mariana Islands. These states argue that when Congress amended the Commodity Exchange Act through the 2010 Dodd-Frank Act, it did not intend to strip states of their traditional authority to regulate gambling.
The American Gaming Association—along with other relevant associations and Gary Gensler, former chairman of the U.S. Commodity Futures Trading Commission (CFTC)—has filed an amicus curiae (friend-of-the-court) brief with the Second Circuit Court of Appeals. Gensler, who previously supported New Jersey’s petition to the Supreme Court, contends that the Dodd-Frank Act was designed to address risks in financial markets, not to authorize sports betting on a nationwide scale.
Last week, the Second Circuit Court of Appeals denied requests from Kalshi and Coinbase for an “injunction pending appeal” in three separate cases involving New York and Connecticut.
Kalshi’s Tribal Partnership Faces Litigation Amid Leadership Dispute
Beyond its struggles with state regulators, Kalshi is also facing a legal challenge regarding who has the authority to approve its partnership with the Alabama-Quassatte Tribal Town of Oklahoma—one of four tribes with which Kalshi established a partnership in October.
According to Mvskoke Media, Sam Marshall…
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