Attorney General Derek Brown announced the case on October 20. It was filed in Third District Court and also names Kalshi’s affiliates and two Susquehanna trading firms, Kalshi’s market makers. This appears to be the first known case in which market makers have been sued together with a prediction market operator.
According to the complaint, more than 32,000 verified Utah users placed an estimated $3 billion or more in wagers, generating between $30.6 million and $61.2 million in fees for Kalshi. The state says residents lost a further $5.5 million on individual wagers, and Brown said those totals could grow as more records come out. Utah argues that Kalshi’s event contracts work like sportsbook products such as parlays and point spreads, and that the company was offering them in the state by September 2024.
The state wants a court order blocking Kalshi’s sports, election, politics and culture contracts in Utah, along with geolocation controls. Gambling in any form is banned under Utah’s constitution.
Brown said:
“Utah has said no to gambling since statehood in 1896. The case is part of a larger investigation.”
Kalshi denies the claims. Spokesperson Jacki McGavick called it “a federally regulated financial exchange” and said the state action does not affect the company’s federal case against Utah. Kalshi filed that suit in February, arguing that the CFTC alone has authority over its event contracts. US District Judge Robert Shelby ruled for Utah in August, and Kalshi’s appeal is now before the Tenth Circuit.
Other federal appeals courts have split on the issue, and New Jersey has asked the US Supreme Court to settle it, backed by attorneys general for 39 states and the District of Columbia. Kalshi’s response is due November 9.
The CFTC has also proposed classifying event contracts on sports, politics, culture and weather as swaps, with public comments open until November 18.
