Utah is suing Kalshi to block the prediction market operator from offering sports and other event contracts in the state, months after a federal judge rejected the company’s attempt to evade Utah’s gambling laws.
Atty. Gen. Derek Brown filed the lawsuit Tuesday in state court, seeking to shut down Kalshi‘s operations in Utah and recover tens of millions of dollars the company allegedly collected through illegal gambling.
Unlike most states challenging prediction markets, Utah prohibits virtually all forms of gambling, including sports betting, casinos and lotteries.
“Utah has said no to gambling since statehood in 1896, and that didn’t change when betting moved onto cellphones,” Brown said during a Tuesday news conference.
Utah seeks millions from Kalshi
The lawsuit alleges Kalshi has collected between $30.6 million and $61.2 million in fees from Utah customers. More than 32,000 Utah residents had verified accounts on the platform as of February, according to the complaint.
In addition to pulling its event contract offerings from the state, Utah wants Kalshi to implement court-approved geolocation controls and surrender allegedly unlawful profits. The complaint names several Kalshi affiliates and trading firms Susquehanna International Group and Susquehanna Government Products as defendants.
Kalshi maintains that the Commodity Futures Trading Commission has exclusive jurisdiction over its event contracts as federally regulated financial derivatives.
“As a national derivatives market overseen by the CFTC, Kalshi answers to federal law, and no single state should have a veto over it,” a company spokesperson said in a statement.
Courts divided over prediction markets
The lawsuit follows an August federal court ruling that found Utah’s gambling laws are not preempted by federal commodities law. Kalshi appealed to the 10th Circuit, which subsequently denied its request for an injunction pending appeal.
Federal appeals courts remain divided over prediction markets. The Third Circuit sided with Kalshi in its dispute with New Jersey, while the Sixth Circuit rejected the company’s federal preemption arguments in cases involving Ohio and Tennessee.
New Jersey has since asked the U.S. Supreme Court to resolve the dispute, drawing support from a bipartisan coalition of state attorneys general.
