Utah AG sues Kalshi, pursues profits from prediction market company

During a press briefing on Tuesday, Attorney General Brown outlined the state’s legal maneuvers, revealing that Utah officials have petitioned a court to compel the named companies to disgorge an estimated $30 million to $60 million in profits. According to the state’s allegations, these profits were amassed through event contracts that violate state gambling statutes. Brown asserted that Kalshi illegally opened its services to more than 32,000 users across Utah, a localized expansion that state officials 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," Brown said 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 rising tensions. Kalshi initially took legal action against Utah in February, shortly after state lawmakers passed legislation explicitly classifying betting on prediction markets as illegal gambling under local law. 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 by the U.S. Commodity Futures Trading Commission (CFTC) does not preempt state-level gambling laws. Following that setback, an appellate court denied Kalshi’s request for an injunction in September, effectively blocking the platform from operating within the state while its broader legal appeal moves forward.

In response to the newly filed Utah lawsuit, Kalshi pushed back against the state’s characterization of its operations, emphasizing its status as a federally regulated entity. Jacki McGavick, a spokesperson for Kalshi, defended the platform in a statement provided to Cointelegraph.

"Kalshi is a federally regulated financial exchange, like the stock market," McGavick said. "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, representing just one front in a sprawling nationwide legal campaign. State authorities across the United States have increasingly trained their sights on prediction market platforms such as Kalshi and Polymarket, arguing that these digital marketplaces operate as unlicensed gambling operations, particularly when offering contracts tied to sports outcomes, elections, and cultural events.

The regulatory posture varies significantly from state to state. While the majority of actions taken by state attorneys general have manifested as civil lawsuits or regulatory cease-and-desist warnings, Arizona stands apart as the only jurisdiction in the country currently pursuing active criminal charges against Kalshi over its gambling offerings. Meanwhile, a growing roster of states—including Michigan, Ohio, Kentucky, Nevada, Massachusetts, Wisconsin, and New York—have initiated civil litigation against one or more prediction market companies, signaling a coordinated, albeit decentralized, pushback against the industry’s rapid growth.

The timing of the Utah lawsuit also coincides with a critical juncture at the highest level of the American judicial system. The legal battle arrives as the United States Supreme Court weighs whether to accept a petition to intervene in a parallel dispute between New Jersey authorities and Kalshi over allegedly illegal sports bets. Should the nation’s highest court elect to take up the case, it could deliver a definitive ruling on a fundamental constitutional and regulatory question: whether the oversight of prediction market companies rests exclusively with federal financial regulators like the CFTC—which maintains that it holds "exclusive jurisdiction" over the platforms’ event contracts—or whether individual states retain the sovereign authority to ban and regulate these markets within their borders.