Utah AG sues Kalshi, pursues profits from prediction market company

During a Tuesday press briefing detailing the enforcement action, Attorney General Brown revealed that state officials have formally petitioned a court to compel the defendants to disgorge between $30 million and $60 million in profits. According to the state’s legal filing, these revenues were generated through what the office characterizes as illegal event contracts offered to local consumers. State regulators estimate that Kalshi improperly extended its services to more than 32,000 users across Utah, a business model that authorities claim has resulted in substantial financial losses for residents.

"Under Utah law, I have determined that this operation is causing a significant and substantial ongoing harm to a significant number of Utahns," Attorney General Brown stated 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 showdown between Utah and the prediction market platform is the culmination of months of escalating tensions and prior court battles. Kalshi initially took legal action against Utah in February after state lawmakers passed legislation explicitly classifying betting on prediction markets as illegal gambling under state statutes.

The legislative move set the stage for a judicial test of state authority versus federal oversight. In August, a state judge delivered a major victory to Utah officials by ruling that federal regulations under the U.S. Commodity Futures Trading Commission (CFTC) do not preempt state-level gambling laws. Following that decision, an appellate court dealt another blow to the platform in September by denying Kalshi’s request for an injunction that would have allowed the service to continue operating within the state while its legal team pursued an appeal.

Despite the mounting state-level pressure, Kalshi continues to defend its operational model, maintaining that its exchange structure complies with federal standards and operates outside the legitimate reach of individual state prohibitions.

"Kalshi is a federally regulated financial exchange, like the stock market," Kalshi spokesperson Jacki McGavick said in a statement responding to the Utah lawsuit. "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."

The confrontation in Utah highlights a broader regulatory battle playing out across the United States regarding the legal status of modern prediction markets.

Ongoing legal battles across the US

The civil lawsuit brought by Utah’s attorney general is part of a rapidly expanding wave of regulatory and legal actions initiated by state authorities throughout the country. State regulators have increasingly targeted prediction market platforms, including Kalshi and Polymarket, over allegations that event-based contracts violate regional gambling laws, with a particular focus on unauthorized sports betting.

While civil enforcement actions have become the norm, the enforcement landscape varies significantly by jurisdiction. Officials in Arizona remain the only ones in the United States currently pursuing criminal charges against Kalshi in connection with its platform offerings. Meanwhile, a growing roster of states—including Michigan, Ohio, Kentucky, Nevada, Massachusetts, Wisconsin, and New York—have opted to file civil lawsuits against one or more prediction market companies to halt operations and protect local consumers from unregulated wagering.

The timing of the Utah lawsuit coincides with mounting pressure at the highest levels of the American judicial system. The U.S. Supreme Court is currently considering whether to accept a petition to weigh in on a parallel legal dispute between New Jersey authorities and Kalshi over allegedly illegal sports bets offered on the platform. If the nation’s highest court ultimately agrees to hear the case, the resulting decision could finally resolve a central constitutional and regulatory question: whether prediction market companies fall exclusively under the regulatory purview of the CFTC—which asserts exclusive jurisdiction over the platforms’ event contracts—or whether individual states retain the sovereign right to ban and regulate these financial products under local anti-gambling statutes.