Utah AG sues Kalshi, pursues profits from prediction market company

During a Tuesday press briefing, Attorney General Brown revealed that Utah officials have officially petitioned a state court to compel the involved companies to disgorge and return approximately $30 million to $60 million in profits allegedly generated through unlawful event contracts. According to the state’s top prosecutor, Kalshi illegally extended its financial services to more than 32,000 users residing in Utah, an operation that state authorities claim has resulted in significant 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," 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 confrontation between Utah and Kalshi is the culmination of months of escalating tensions and prior court battles. The conflict intensified in February when Kalshi preemptively sued Utah after state lawmakers passed legislation explicitly classifying betting on prediction markets as illegal gambling under state law. The legislative move drew a sharp line in the sand between local regulators and the burgeoning prediction market industry.

As the legal battle progressed through the summer, a state judge ruled in favor of Utah officials in August, concluding that federal laws governing the US Commodity Futures Trading Commission (CFTC) do not preempt state-level gambling restrictions. The momentum continued against the platform when an appellate court denied Kalshi’s request for an injunction in September, effectively maintaining a block that prevents the platform from operating legally within the state while its appeal moves forward.

In response to the newly filed lawsuit, Kalshi pushed back against the state’s characterization of its operations, emphasizing its status as a federally regulated entity.

"Kalshi is a federally regulated financial exchange, like the stock market," Kalshi spokesperson Jacki McGavick told Cointelegraph. "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 high-stakes dispute in Utah represents only one front in a much broader, nationwide jurisdictional war between state authorities and prediction market platforms. Across the United States, state regulators have increasingly targeted platforms like Kalshi and Polymarket over alleged violations of local gambling statutes, particularly concerning lucrative event contracts tied to sports outcomes.

While regulatory enforcement varies significantly by jurisdiction, Arizona remains unique as the only US state pursuing criminal charges against Kalshi. However, civil lawsuits have proliferated across the country. Jurisdictions including Michigan, Ohio, Kentucky, Nevada, Massachusetts, Wisconsin, and New York have all initiated civil legal actions against one or more prediction market companies, signaling a coordinated pushback by state attorneys general who argue that these platforms are bypassing traditional state-regulated sportsbooks and gambling protections.

The timing of the Utah lawsuit coincides with a critical juncture at the federal level. The legal showdown comes as the US Supreme Court actively considers whether to accept a petition to weigh in on a parallel case originating from New Jersey. That dispute centers on New Jersey’s own legal challenges against Kalshi over allegedly unauthorized sports betting markets.

If the nation’s highest court decides to accept the case, it could deliver a definitive ruling on a deeply contentious constitutional and regulatory question: whether the oversight of prediction market companies belongs exclusively to federal regulators like the CFTC—which maintains that it holds "exclusive jurisdiction" over these platforms and their event contracts—or whether individual states retain the sovereign right to ban or regulate them under local gambling laws. Until the Supreme Court or Congress steps in to clarify the jurisdictional boundaries, platforms like Kalshi will likely continue to navigate a fragmented and hostile legal landscape across individual American states.