Utah sues Kalshi and Susquehanna firms over prediction market betting

Utah Attorney General Derek Brown announced a lawsuit on Oct. 20 against KalshiEX, Kalshi Trading and two Susquehanna International Group entities, alleging that the prediction market has run illegal betting in the state since 2024. The civil complaint was filed in Utah's Third District Court. Brown said at a Tuesday press briefing that Utah officials petitioned the court to compel the companies to return about $30 million to $60 million in profits from allegedly illegal event contracts.

Brown's office said Kalshi offered services to more than 32,000 verified users in Utah, resulting in significant losses for state 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. "And so today, we are asking the court to stop sports, elections, politics, culture and mention bets here in Utah." The defendants named in the filing include Susquehanna Derivatives and Susquehanna Ventures alongside the Kalshi entities, according to Cointelegraph. KUTV reported the same press briefing and the state's request for disgorgement of profits.

Kalshi spokesperson Jacki McGavick disputed the state's authority. "Kalshi is a federally regulated financial exchange, like the stock market," 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." The company framed the state court action as separate from its ongoing federal litigation.

The case follows an August ruling in which the court found that the Commodity Futures Trading Commission does not preempt state law for Kalshi's political event contracts. In September, an appellate court denied Kalshi's request for an injunction that would have allowed the platform to operate while its appeal proceeds. Kalshi sued Utah in February after lawmakers passed a bill classifying betting on prediction markets as gambling under state law.

Utah is one of several states pursuing legal action against prediction market platforms. Arizona remains the only state bringing criminal charges against Kalshi; Michigan, Ohio, Kentucky, Nevada, Massachusetts, Wisconsin and New York have filed civil suits against one or more prediction market companies. The Utah filing arrives while the U.S. Supreme Court considers whether to accept a petition from New Jersey's case against Kalshi over allegedly illegal sports bets. If the high court takes the case, it could resolve whether prediction markets fall under state authority or under the CFTC, which claims exclusive jurisdiction over event contracts.

Utah's filing compares the venue to a "back-alley gambling den," language Kalshi disputes. Susquehanna has not issued a public response to the Utah complaint. The state's claims turn on whether cash-settled event contracts violate Utah's gambling statutes even when offered under a federal derivatives license.

Brown's petition asks the court for injunctive relief in addition to disgorgement. Injunctive relief would bar the named companies from offering event contracts to Utah residents while the case is litigated, even if the federal CFTC relationship remains intact. The state is not challenging Kalshi's national futures registration directly; the theory is that state gambling statutes still bind conduct inside Utah when contracts settle in cash and are marketed as bets on sports, elections and cultural outcomes.

Kalshi has built its US business on the argument that CFTC-regulated exchanges occupy a federal lane that states cannot police. That argument has produced mixed results in state courts. The August Utah ruling and the September appellate decision both rejected the preemption claim for political event contracts, while other states have obtained temporary orders in sports-betting contexts. Susquehanna, as a market-making and trading firm behind major prediction market venues, has been drawn into multiple state actions as an alleged beneficiary of the same contract flow.

The restitution figure Utah cites, $30 million to $60 million, is tied to profits the state attributes to Utah-based trading since 2024 rather than to total platform revenue. Kalshi has not published state-level volume breakdowns. A parallel New Jersey case is waiting on the U.S. Supreme Court's decision whether to grant certiorari; that petition asks the justices to decide which authority, the CFTC or state regulators, controls prediction market event contracts. Until that question is resolved, multi-state litigation against Kalshi and related trading firms is expected to continue.