Utah Attorney General Derek Brown has filed a civil lawsuit against prediction market platform Kalshi, its affiliated entities, and two Susquehanna trading firms. The official lawsuit targets Kalshi’s operations, alleging that it has facilitated illegal gambling activities for Utah residents since 2024 through event contracts.
The Utah government is not merely seeking a halt to betting transactions, but is actively pursuing the recovery of tens of millions of dollars in profits funneled into the platform operators’ coffers.
How Much Money Is Being Demanded
In court filings, the Utah government urged the judge to require Kalshi and the defendants to disgorge all profits generated from contracts alleged to have violated state law. The demanded profit disgorgement ranges between $30 million and $60 million.
Derek Brown detailed that Kalshi had offered its services to more than 32,000 users within Utah. Public participation on the prediction exchange is considered to have led to significant financial losses for local residents. On those grounds, Utah is requesting that the court promptly issue a comprehensive ban on all Kalshi event contract offerings within its jurisdiction. The requested injunction encompasses contracts tied to sports competitions, election agendas, political developments, cultural topics, and wagering markets involving public figures.
Jurisdictional Tug-of-War with the CFTC
The open conflict between Utah and Kalshi began in February, shortly after the state enacted a new law banning gambling. In response to the legislation, Kalshi had preemptively sued Utah, arguing that its registration under the Commodity Futures Trading Commission (CFTC) automatically preempted local laws. That argument was rejected by the court, which ruled that federal CFTC regulation does not inherently negate state law enforcement authority.
Kalshi spokesperson Jacki McGavick emphasized that the company operates as an officially registered exchange under the exclusive federal jurisdiction of the CFTC. Relying on this regulatory status, Kalshi maintained that its prediction market operations cannot be vetoed by individual state governments.
Multi-State Legal Pressure
Utah’s lawsuit follows a string of aggressive actions taken by various US jurisdictions against Kalshi. In Arizona, law enforcement authorities have escalated the issue to criminal charges. Concurrently, similar civil lawsuits have been mounted by authorities in New York, Nevada, Massachusetts, and Michigan.
The US Supreme Court is currently reviewing a petition in a case between New Jersey and Kalshi rooted in a similar dispute. A ruling from the nation’s highest court could define the boundaries between the CFTC’s federal oversight mandate and the rights of individual states to regulate prediction markets.
Reported by Cointelegraph.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
