Utah Attorney General Seeks $61.2 Million From Kalshi for Alleged State Gambling Law Violations

Utah Attorney General Derek Brown has filed a complaint against prediction market operator Kalshi, an affiliate and two Susquehanna trading firms. Submitted October 20 to Utah’s Third District Court, the action accuses the parties of violating state gambling laws. It seeks up to $61.2 million in restitution and other financial remedies together with measures to stop the companies from continuing the activity.

The state wants to block Kalshi from offering event contracts on sports, politics, elections and culture to Utah residents. Brown’s office is also pursuing geographic restrictions on platform access and recovery of profits obtained through the transactions.

According to reporting by Focus Gaming News, Kalshi accounts in Utah generated between $30.6 million and $61.2 million in fees from $3 billion in trades, with at least 32,000 residents using the platform. The complaint alleges Kalshi began offering markets to Utah users by September 2024 despite knowing the activity violated state law. Utah has opposed gambling since it became a state in 1896.

Kalshi’s Federal Regulation Defense

Kalshi has rejected Utah’s position. “Kalshi is a federally regulated financial exchange, like the stock market. Our customers trade with each other and set the prices. As a national derivatives market overseen by the CFTC, the company answers to federal law, and no single state should have a veto over it,” a company spokesperson said.

The complaint follows an August federal court decision. US District Judge Robert J. Shelby granted summary judgment in favour of Utah, ruling that the Commodity Exchange Act does not preempt the state’s gambling laws against Kalshi’s sports event contracts.

Limits of Federal Preemption Against State Enforcement

The court’s finding limits the scope of federal preemption Kalshi can invoke. Although the platform operates under CFTC oversight, the ruling affirms that this status does not bar states from enforcing their own anti-gambling statutes. Parallel developments in Ohio and Tennessee show the issue extends beyond Utah. Operators face concrete exposure to restitution claims and market blocks in prohibition states, requiring tighter assessment of user location controls and regulatory exposure before expanding.

Reporting: Focus Gaming News

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