Utah has sued Kalshi and two Susquehanna trading firms, alleging that their prediction-market operations amount to an illegal gambling business under state law and seeking to halt betting on sports, elections, politics, culture and other events. The lawsuit places Utah among a growing group of state and local authorities challenging whether federally structured “event contracts” can be offered to residents where comparable wagering is prohibited.
The complaint, filed Tuesday by Utah Attorney General Derek Brown’s office, names five Kalshi entities, Susquehanna International Group and Susquehanna Government Products. Utah estimates that Kalshi collected between $30.6 million and $61.2 million in fees from accounts based in the state through Oct. 19, according to the filing.
Utah is asking the court to block the disputed contracts, require defendants to return funds allegedly earned through unlawful activity, compensate the state and Utah residents, and award damages. It also seeks court-approved geolocation procedures designed to prevent Utah residents from accessing restricted markets.
Utah challenges the event-contract label
The state’s case targets the terminology used by prediction-market platforms as much as the products themselves. Kalshi describes its contracts as markets tied to the outcome of future events, allowing users to buy positions that pay out if a specified event occurs.
Utah argues that the label does not alter the practical nature of the transaction. In the complaint, the state says users are placing wagers on uncertain outcomes and that platform operators collect fees from that activity. The filing compares KalshiEx, the entity that operates the platform, to “the manager of a back-alley gambling den” that hosts wagers and takes a share of the money.
The state also alleges that firms on the other side of customer positions perform the role of a traditional betting house. Kalshi Trading, Susquehanna International Group and Susquehanna Government Products allegedly accepted positions against users and received funds when those users lost, according to the complaint.
That allegation goes beyond a challenge to Kalshi’s exchange operator. Utah is attempting to draw market makers and liquidity providers into its gambling-law theory, arguing that the parties supplying counterparties to customer trades are integral to the alleged wagering operation.
Brown urged Utah residents to stop using the products during a press conference, saying they were designed to take users’ money. He said the current case is focused on Kalshi, while characterizing it as part of a larger investigation.
Sports and elections are among the requested restrictions
Utah’s proposed injunction would cover several types of event contracts, including sports, elections, politics, culture and markets classified as “mentions.” The latter category can include contracts tied to whether a word, person or subject appears in a public event or media setting.
The request reflects how prediction markets have expanded beyond financial and economic questions into subjects long regulated as gambling in many states. Sports contracts have produced some of the most direct conflicts, since they can closely resemble bets offered by licensed sportsbooks: users take a position on an outcome, the contract settles after the event, and the winning side receives a payout.
Election and political markets raise a different set of concerns. Their supporters argue that these markets can aggregate public expectations about a race or policy outcome. State officials challenging them have focused less on forecasting value and more on the fact that users can risk money on political events from a mobile device.
Utah’s complaint treats those categories as part of the same alleged gambling business rather than as separate financial products requiring separate legal treatment.
A growing state-level legal fight
The Utah action follows lawsuits filed in August by Connecticut and the city of Baltimore over alleged unlicensed sports betting. Baltimore’s case also named Coinbase, Robinhood and Webull, which were identified as distribution partners for the disputed products.
Those cases have created pressure not only on the platforms listing event contracts but also on companies that provide customer access or trading liquidity. A court ruling in Utah could therefore be closely watched by brokerages, app operators and market-making firms involved in the sector.
The most consequential recent legal development came in September, when a federal appeals court ruled that Ohio and Tennessee could enforce their sports-betting laws against Kalshi. The court rejected Kalshi’s argument that federal oversight of its contracts prevented states from applying their own gambling restrictions. Kalshi later said it expected that decision to be overturned.
That ruling did not decide Utah’s lawsuit, and state gambling laws differ. It nonetheless gives Utah a recent appellate decision supporting the view that state restrictions can apply even where a platform argues that its products operate under a federal market framework.
Geolocation becomes a practical legal battleground
Utah’s demand for stricter location controls could have immediate operational implications if the court grants relief. Online platforms typically use geolocation technology to determine whether a user is in a permitted jurisdiction, but states have increasingly challenged whether those checks are sufficiently reliable or whether users can bypass them.
The complaint’s request for more precise, court-approved verification signals that Utah is seeking controls that extend beyond a simple order to stop serving residents. Such measures could require platforms to alter access procedures for Utah accounts or face enforcement risks.
The case also sharpens a commercial tension within prediction markets. Their appeal rests partly on making contracts available online to a national user base. State-by-state gambling enforcement can fragment that model, especially for contracts tied to sports and other consumer-facing events.
Utah’s lawsuit now asks a court to decide whether the platform’s market structure and federal framing can coexist with the state’s prohibition on the underlying activity. For Kalshi and firms providing trading liquidity, the answer could determine whether event contracts remain available to Utah users at all.
Concerned about shifting event-contract rules? Learn how prediction markets may evolve and what traders should watch next.
Disclaimer: The content on this page is provided for general informational purposes only and does not represent the views or financial advice of Toobit. We make no guarantees regarding the accuracy or completeness of this information and shall not be held liable for any errors, omissions, or outcomes resulting from its use. Investing in digital assets involves risk; users should independently evaluate their financial situation and the risks involved. For further details, please consult our Terms of Service and Risk Disclosure.
