Utah Calls Kalshi a “Back-Alley Gambling Den” in New Lawsuit

TLDR

• Utah Attorney General Derek Brown sued Kalshi, its affiliates and two Susquehanna trading firms on Tuesday.
• The state wants $30 million to $60 million in profits returned and says Kalshi served more than 32,000 Utah users.
• Utah seeks to block sports, election, politics, culture and “mentions” bets, with stricter location checks.
• Kalshi says it is a federally regulated exchange overseen by the CFTC and that its federal case is not affected.
• The US Supreme Court is weighing a petition over New Jersey’s case against Kalshi that could settle the state versus federal question.

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Utah Attorney General Derek Brown announced a lawsuit against Kalshi on Tuesday. The suit also names its affiliates and two Susquehanna trading companies. It claims the prediction market platform has helped run illegal betting in the state since 2024.

LATEST: 🇺🇸 Utah is suing Kalshi, calling it “the manager of a back-alley gambling den” and accusing it of a “brazen pattern of unlawful conduct.” pic.twitter.com/cDNQMVswap

— CoinMarketCap (@CoinMarketCap) October 20, 2026

Brown said Utah has asked a court to make the companies return about $30 million to $60 million in profits. The state says these came from event contracts it calls illegal. It also says Kalshi served more than 32,000 users in Utah.

What the lawsuit claims

The complaint names five Kalshi companies, along with Susquehanna International Group and Susquehanna Government Products. Utah wants the companies to return money they allegedly made illegally. It also seeks payment to the state and to residents, plus damages.

The state argues that calling bets “event contracts” does not change what Kalshi offers. It compares KalshiEx, which runs the platform, to “the manager of a back-alley gambling den.” The complaint says that manager hosts bets and takes a cut.

Utah is also targeting the firms on the other side of user bets. It says Kalshi Trading and the Susquehanna firms act like a betting house. The state says they take bets against users and collect money when users lose.

Sports and gaming attorney Daniel Wallach called it the first state attorney general enforcement action aimed at prediction market makers.

Utah estimates Kalshi collected between $30.6 million and $61.2 million in fees from Utah accounts through Oct. 19. The state noted the true figure could be higher or lower.

The state wants to block sports, election, politics, culture and “mentions” bets. It also wants the companies to use more precise location checks to enforce those limits.

At a press conference, Brown spoke about the appeal of these platforms to young men. “To those of you who are ensnared in this addiction, please stop,” he said.

He added that the companies are “engineered to do one thing and one thing alone, and that’s empty your wallet.”

Kalshi responds and other cases

Kalshi spokesperson Jacki McGavick told Cointelegraph the company is “a federally regulated financial exchange, like the stock market.” She said customers trade with each other and set the prices. She added that the Commodity Futures Trading Commission oversees Kalshi and that no single state should have a veto over it.

McGavick said the new state court action does not affect Kalshi’s ongoing federal litigation. Kalshi sued Utah in February after lawmakers passed a bill treating prediction market betting as gambling. In August, a judge ruled for Utah and said federal law does not override state gambling laws.

An appellate court denied Kalshi’s request for an injunction in September. That request would have kept the platform running during its appeal.

Other states and cities have also taken action. Connecticut and Baltimore filed lawsuits in August over alleged unlicensed sports betting. Baltimore also sued Coinbase, Robinhood and Webull, which distribute Kalshi’s products.

In September, a federal appeals court ruled that Ohio and Tennessee can enforce their sports betting laws against Kalshi. Arizona is the only state pursuing criminal charges against Kalshi. Michigan, Ohio, Kentucky, Nevada, Massachusetts, Wisconsin and New York have filed civil suits against prediction market companies.

Brown said Utah is focused on Kalshi for now but hinted other platforms could be targeted. “Ultimately, this is part of a larger investigation,” he said.

The US Supreme Court is now considering whether to take up a petition over New Jersey’s case against Kalshi. If accepted, the case could decide whether state authorities or the CFTC oversee these platforms.