Utah Attorney General Sues Kalshi Over Prediction Market Contracts
Derek Brown's office wants Kalshi barred from Utah and tens of millions of dollars in fees clawed back, building on an earlier federal court win for the state.
Utah's attorney general, Derek Brown, has filed a state court lawsuit against prediction market operator Kalshi, seeking to end its activities in the state and recover money the company is accused of taking from Utah customers through unlawful gambling operations.
The case, lodged on Tuesday, follows a federal court ruling in August that found Kalshi could not use federal commodities law to sidestep Utah's gambling statutes. Kalshi took that decision to the 10th Circuit Court of Appeals, which has since refused to pause enforcement while the appeal proceeds.
Utah's gambling rules are notably strict. The state bans nearly every form of gambling, including sports wagering, casinos and lotteries, a stance Brown described at a press conference as dating back to statehood in 1896 and unaffected by the shift of betting onto phones, as reported by Legal Sports Report.
According to the complaint, Kalshi has taken in between $30.6 million and $61.2 million in fees from Utah-based users, with more than 32,000 residents holding verified accounts on the platform as of February.
Beyond demanding that Kalshi stop offering event contracts to Utah residents, the state wants the company to adopt geolocation tools subject to court approval and to hand over profits it says were earned unlawfully. The lawsuit also names Kalshi affiliates alongside trading firms Susquehanna International Group and Susquehanna Government Products as defendants.
Kalshi continues to argue that its contracts fall under the exclusive purview of the Commodity Futures Trading Commission as federally regulated derivatives products. A company spokesperson said Kalshi operates as a national derivatives market answerable to federal law, adding that "no single state should have a veto over it."
The dispute sits within a wider and unsettled legal landscape for prediction markets. According to Legal Sports Report, federal appeals courts have reached opposing conclusions: the Third Circuit backed Kalshi in a case brought by New Jersey, while the Sixth Circuit sided against the company's preemption argument in disputes involving Ohio and Tennessee.
New Jersey has asked the U.S. Supreme Court to settle the underlying legal question, a request that has gathered support from a bipartisan group of state attorneys general.