Utah Attorney General Derek Brown has sued prediction market operator Kalshi and its dedicated market maker Susquehanna for illegal online gambling.
- Kalshi sued Utah in February, seeking to prevent its enforcement of state gambling laws.
- In August, the court refused Kalshi’s request for an injunction.
- Utah is seeking to shut down Kalshi and recoup the money Kalshi collected from state residents.
Brown didn’t pull any punches. The lawsuit, filed in Utah’s Third Judicial District Court in and for Salt Lake County, states that Kalshi’s “brazen pattern of unlawful conduct has inflicted serious harm on the State and its residents.”
The lawsuit further claimed that “KalshiEx participates in the same way the manager of a back-alley gambling den (or cardroom) participates in gambling: by hosting and facilitating the gambling events and by taking a percentage fee (or “rake”) of amounts gambled.”
How it started
The legal battle between Kalshi and Utah began back in February. Kalshi filed a suit against Utah, seeking an injunction to prevent the state from enforcing its state gambling laws. The lawsuit cited an op-ed by Brown, which specifically called out Kalshi as a threat to Utah’s anti-gambling laws.
In August, the court ruled against Kalshi, opening the door for enforcement. Kalshi appealed that decision to the Tenth Circuit Court of Appeals and asked for an emergency injunction. The court denied Kalshi’s injunction request last month.
Enjoying Covers content? Add us as a preferred source on your Google account
What Utah wants
Utah is asking the court to shut down Kalshi’s operation in Utah and compel Kalshi to use a third-party geolocation provider to prevent access to its services by state residents. It also seeks financial restitution for any losses incurred by those within the state due to Kalshi’s actions and disgorgement of any financial gains received by the defendants. The lawsuit estimates that Kalshi has received between $30.6 million and $61.2 million in fees from its Utah operations.
Along with Kalshi, Utah is suing Susquehanna, one of Kalshi’s primary market makers. The suit claims that as a market maker, Susquehanna is profiting from illegal bets placed by Utah residents.
Gambling is illegal in Utah. Kalshi advertised its sports and election bets as “legal in all 50 states” anyway. Utah is suing, alleging Kalshi kept taking bets from Utahns after a federal judge rejected its argument that Utah law doesn’t apply. https://t.co/W2pBICycjg
— Office of the Utah Attorney General (@UtahAG) October 20, 2026
Prediction market news is rife with lawsuits between providers and state regulators. Utah’s case, however, may have a bit more heft to it. Gambling is constitutionally prohibited in the Beehive State.
The lawsuit points out that Kalshi routinely markets using taglines that include, “The First Nationwide Legal Sports Betting Platform” and “Sports Betting Legal in All 50 States on Kalshi.” Yet, Utah can legitimately argue that no betting is legal within its borders.
Meanwhile, contrary to its own marketing, Kalshi claims that its sporting event contracts do not constitute sports betting. It claims that because prediction markets are regulated by the Commodity Futures Trading Commission, its sporting event contracts are akin to financial swaps or hedges.
Kalshi is not alone in its assertion. In fact, all prediction market operators claim that their federal affiliation places them above state gambling laws. And that claim won’t be resolved in Utah. That will likely require a decision by the U.S. Supreme Court.
