Utah Sues Kalshi over Alleged Illegal Gambling, Seeks up to $61M in Fees

SALT LAKE CITY, Utah – Utah Attorney General Derek Brown filed a new lawsuit against prediction market operator Kalshi on October 20, alleging violations of the state’s gambling laws. The complaint seeks to block the company’s event contracts in Utah and recover revenue allegedly generated through unauthorized wagering.

The civil action, filed in Utah’s Third District Court, names several Kalshi entities alongside Susquehanna International Group and Susquehanna Government Products. State officials estimate that Kalshi collected between $30.6 million and $61.2 million in fees attributable to Utah accounts, although those figures remain disputed estimates rather than established damages.

Utah Seeks Recovery of Estimated Kalshi Gambling Revenue

The lawsuit alleges that Kalshi has offered gambling products to Utah residents since at least September 2024, despite the state’s constitutional prohibition on gambling. Attorney General Brown argues that the company’s prediction market contracts closely resemble traditional sportsbook wagers, regardless of their classification as financial products.

According to the complaint, approximately 55,800 accounts were registered with Utah addresses as of February 2026, including more than 32,000 accounts eligible to trade. The state estimates that Utah users have participated in billions of event contracts, generating substantial transaction fees for the platform.

The estimated $30.6 million to $61.2 million in fees is based on assumptions about Utah’s share of Kalshi’s trading volume and the amounts charged per contract. It does not represent independently verified revenue or a fixed damages award. Utah is asking the court to determine the financial remedies available, including restitution and recovery of allegedly unlawful proceeds.

Brown also alleges that Kalshi’s activities constitute a public nuisance, arguing that unauthorized gambling creates financial and social risks for residents. The state has requested a jury trial and court orders restricting the company’s operations within Utah.

Lawsuit Targets Sports Betting and Other Event Contracts

The complaint challenges Kalshi’s contracts covering sporting events, elections, politics, entertainment and other outcomes. State attorneys argue that these products allow users to wager on uncertain events in much the same way customers place bets through conventional sportsbooks.

Kalshi operates an exchange where participants trade event contracts with other users. Unlike traditional sportsbooks, which generally accept bets against the operator, Kalshi says it facilitates transactions between traders and earns fees from those trades.

Utah’s lawsuit also identifies trading companies associated with Susquehanna, alleging their participation in activities that violate state gambling restrictions. These allegations have not been adjudicated, and the complaint does not establish liability for any defendant.

At an October 20 press briefing, Brown said his office wanted to prevent Kalshi from continuing to offer the disputed contracts to Utah residents. The requested restrictions extend beyond sports-related markets to include contracts tied to political and cultural events.

Kalshi Maintains Federal Authority over Prediction Markets

Kalshi rejected Utah’s allegations, maintaining that its event contracts fall under federal commodities regulation rather than state gambling laws. In a statement to KSL, the company said it operates a federally regulated exchange where customers trade contracts with one another, arguing that “no single state should have a veto over it”. Kalshi added that the new state-court lawsuit would not affect its ongoing federal litigation.

The latest action follows an earlier federal dispute initiated by Kalshi in February 2026. In August, a federal judge ruled in favor of Utah, rejecting the company’s argument that federal commodities legislation prevented the state from enforcing its gambling laws against the challenged contracts.

Kalshi appealed that decision, but the Tenth Circuit denied its emergency injunction request in September. That ruling left Utah free to pursue enforcement while the federal appeal continues, without resolving the underlying appeal on its merits.

The October 20 state lawsuit represents a separate enforcement action seeking financial recovery and restrictions on Kalshi’s activities. Its outcome could have implications for similar disputes across the United States, where regulators and prediction market operators continue to contest the boundary between gambling laws and federal financial market oversight.

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