Utah Sues Kalshi Over 32,000 Users and Up to $60M in Profits

Utah Attorney General Derek Brown filed suit Tuesday against Kalshi, its affiliates, and two Susquehanna trading companies, asking a court to force them to hand back somewhere between $30 million and $60 million in profits. Brown says those profits came from event contracts that broke state law.

Brown alleged Kalshi had been offering prediction markets to more than 32,000 Utah users since 2024. He said those users suffered significant losses. At a Tuesday press briefing, Brown called the operation a source of “significant and substantial ongoing harm” to Utah residents and also described it as a “public nuisance.” He wants the court to shut down bets on sports, elections, politics, and culture inside Utah’s borders. The $30 million to $60 million figure is an estimate, Brown’s office made clear — not a number carved in stone. But it’s big enough to get attention.

Kalshi didn’t stay quiet.

Kalshi’s Federal Argument

The company pushed back fast. In a statement, Kalshi said it’s a federally regulated financial exchange operating under the oversight of the Commodity Futures Trading Commission — the CFTC — and argued that federal law, not state gambling rules, governs its event contracts. Kalshi also pointed out that customers trade with each other and set prices themselves, which the company seems to think matters for how its platform gets classified legally. And Kalshi said the Utah civil action didn’t affect its ongoing federal litigation. So as far as the company’s concerned, two separate fights are running on two separate tracks.

That’s a pretty standard preemption argument — federal authority trumps state law — and Kalshi has leaned on it hard throughout its legal battles. It didn’t work in Utah earlier this year.

How Utah Got Here

The dispute goes back to a Utah law that lawmakers passed treating prediction-market betting as gambling under state law. Kalshi sued Utah in February after that legislation cleared the legislature. The company was trying to block the law before it could be enforced.

It didn’t go well. In August, a judge ruled for Utah officials, finding that federal laws under the CFTC did not preempt state gambling rules. The court rejected Kalshi’s argument that CFTC oversight barred Utah from applying its own gambling statutes. Then in September, an appellate court denied Kalshi’s request for an injunction. That ruling kept the platform from operating in Utah while the appeal moved forward.

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So Kalshi’s been locked out of Utah for months now. The new civil suit adds a financial demand on top of the operational ban.

Prediction-market platforms have been fighting these battles across a lot of states at once. Utah’s action is part of a broader wave of state-level enforcement against Kalshi and Polymarket, with most cases centered on sports betting. The legal environment for these platforms has gotten genuinely murky — state gambling regulators and federal commodities regulators are basically fighting over who gets to call the shots.

Arizona is the only state that’s gone criminal against Kalshi so far. Michigan, Ohio, Kentucky, Nevada, Massachusetts, Wisconsin, and New York have all filed civil suits against one or more prediction-market companies. That’s eight states with active legal actions, not counting Utah’s new filing. The numbers keep growing.

Supreme Court Petition Still Pending

There’s a separate case that could reshape all of it. A dispute involving Kalshi is sitting before the U.S. Supreme Court, which hasn’t yet decided whether to accept a petition tied to New Jersey’s case against the company over allegedly illegal sports bets.

If the Supreme Court takes it, the case could settle the core question: does authority over prediction-market event contracts belong to state regulators or to the CFTC, which claims exclusive jurisdiction? That’s the same question Utah’s courts have been wrestling with. A Supreme Court answer would cut through a lot of the ongoing confusion — but there’s no ruling yet on whether the court will even hear it.

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The CFTC has been pretty consistent in asserting that it alone governs these contracts. States aren’t buying it.

Brown’s Tuesday filing lands while that Supreme Court petition sits unanswered. Utah is asking for profits going back to 2024, covering a period when Kalshi was allegedly serving those 32,000-plus state residents despite the legal fight already underway.