Utah AG sues Kalshi, pursues profits from prediction market company

During a Tuesday press briefing detailing the state’s legal maneuvers, Attorney General Brown revealed that Utah officials have officially petitioned a court to compel the named companies to disgorge and return approximately $30 million to $60 million in profits. According to the state’s allegations, these profits were generated through what officials have characterized as illegal event contracts offered to local consumers. Furthermore, the Utah attorney general alleged that Kalshi unlawfully extended its platform’s services to more than 32,000 users across the state, a footprint that state regulators claim has resulted in substantial financial losses for local participants.

"Under Utah law, I have determined that this operation is causing a significant and substantial ongoing harm to a significant number of Utahns," said Brown during the briefing. "And so today, we are asking the court to stop sports, elections, politics, culture, and mention bets here in Utah."

The legal hostilities between Utah and the prediction market operator are rooted in a series of prior clashes. Kalshi initially filed a lawsuit against Utah in February, shortly after state lawmakers passed a definitive bill classifying betting on prediction markets as a form of illegal gambling under state jurisdiction. The legislative move set the stage for a judicial showdown. In August, a presiding judge delivered a ruling in favor of Utah officials, concluding that federal oversight laws administered by the US Commodity Futures Trading Commission (CFTC) do not preempt state-level gambling laws and enforcement powers. The legal pressure intensified in September when an appellate court denied Kalshi’s request for an emergency injunction, a decision that effectively blocked the platform from operating within the state while its broader legal appeal moves forward.

In response to the mounting legal pressure and the newly announced Utah lawsuit, Kalshi has forcefully defended its operational model and regulatory standing. Jacki McGavick, a spokesperson for Kalshi, issued a statement to Cointelegraph pushing back against the state’s characterization of the platform’s services.

"Kalshi is a federally regulated financial exchange, like the stock market," McGavick stated. "Our customers trade with each other and set the prices. As a national derivatives market overseen by the CFTC, Kalshi answers to federal law, and no single state should have a veto over it. This latest state court action does not affect our ongoing federal litigation."

Ongoing legal battles across the US

The civil lawsuit launched by Utah is far from an isolated incident. It represents just one front in a rapidly expanding wave of legal actions filed by US state authorities against prominent prediction market platforms, including Kalshi and Polymarket. These state-level interventions frequently target alleged violations of local gambling statutes, with a particular focus on sports betting and political event contracts that blur the line between traditional derivatives trading and prohibited wagering.

While regulatory and legal pushback has taken various forms across the country, the enforcement landscape remains fractured. Officials in Arizona, for instance, remain unique in the US for pursuing criminal charges against Kalshi in connection with its platform operations. Meanwhile, a growing coalition of other states—including Michigan, Ohio, Kentucky, Nevada, Massachusetts, Wisconsin, and New York—have opted to file civil lawsuits against one or more prediction market companies, seeking to halt operations or extract penalties under local consumer protection and anti-gambling frameworks.

The timing of the Utah lawsuit coincides with a broader, national constitutional and regulatory reckoning. The case arrives precisely as the US Supreme Court weighs whether to accept a petition to intervene in a parallel legal battle between New Jersey authorities and Kalshi concerning allegedly illegal sports bets. If the nation’s highest court ultimately decides to take up the case, the resulting decision could provide definitive legal clarity on a fundamental question dividing state and federal authorities: whether the exclusive jurisdiction claimed by the CFTC over event contracts shields these platforms from state gambling laws, or if state regulators retain the sovereign authority to ban or regulate prediction markets within their borders.