Utah is suing Kalshi for what the state calls a “brazen pattern of unlawful conduct,” and is asking a judge to order the company to stop offering wagers in the state and approve a geolocator tool to enforce the ban.

It also wants the prediction market platform, used primarily for sports betting, to pay the millions it has made through fees from wagers Utahns placed and that residents have lost through those bets.

Attorney General Derek Brown stressed that the lawsuit isn’t targeting the more than 32,000 Utahns who have verified Kalshi accounts.

“Let me be clear: It’s against the companies,” Brown said. “It’s not against you.”

Gambling is illegal in Utah as part of the state’s constitution — and Kalshi is “well aware” of that, the complaint filed Tuesday in state court says. It names Kalshi, four of its subsidiaries and two Pennsylvania-based trading companies that provide pricing and liquidity for the platform.

Utah’s prohibition hasn’t stopped gambling companies from operating in what they consider a legal gray area. Kalshi and other prediction markets claim event contracts are financial “swaps” sanctioned by a federal trading commission.

But Kalshi functions the same way as “the manager of a back-alley gambling den,” the state argues, because the company acts as the market maker on its platform, facilitates bets and retains a portion of each bet as its own payment.

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The company even has an entity responsible for finalizing and settling wagers, including making payouts, something the state argues means it isn’t just a third-party trading platform.

“It is administering a closed-loop wagering system,” the complaint reads, “where it creates the games, handles the bets, and pays out the winners.”

Attorneys representing Kalshi in a federal lawsuit against the state did not immediately respond to a Tuesday request for comment. Company spokespeople have previously referred to similar lawsuits as a type of “political theater” and said states “can’t just shut down a federally licensed exchange.”

While the state is focused on Kalshi for now, Brown asked other companies using similar means to “follow Utah law.”

(Trent Nelson | The Salt Lake Tribune) Utah Attorney General Derek Brown, shown in 2025, calls on Kalshi and other prediction markets to follow the state’s laws.

‘Indistinguishable’ from a traditional sportsbook

At first, the complaint says, Kalshi only offered “wagers tied to traditional financial instruments.” But as early as 2024, any attempted distinction between what it does and gambling “collapsed,” the complaint adds, once it started offering sports trading and started using language specifically referring to betting on professional football and other sports.

Kalshi now offers “numerous” types of wagers, which the company refers to as event contracts, the complaint says, and is “regularly” adding more.

It offered as many as 100,000 to 300,000 open wagers, which it calls markets, per day in three months over the summer, according to the complaint.

The event contracts or wagers, the state argues, are “indistinguishable from the format of bets offered through any sportsbook,” including proposition bets, parlays and betting on the point spreads in games.

Kalshi offers more than just sports betting. The complaint spells out various other kinds of wagers people can make, including:

• Elections with wagers like “Blue wave this year?” and “Closest Senate race this year?”

• Politics with options including “[President Donald] Trump’s approval rating Friday” and “Who will be arrested this year?”

• Culture wagers over things like who will headline Coachella in 2027 and the next James Bond.

• Mentions with wagers like whether Trump will mention Arizona at an investment announcement.

Kalshi made millions, and Utahns have lost millions

The state estimates Kalshi has made between $30.6 million and $61.2 million in fees from wagers placed by Utah accounts through the fees it retains as a portion of each wager and that Utahns have lost $5.5 million in individual wagers.

Brown called those “general numbers” and said the state will learn more as it gathers information leading up to a possible civil trial. If Utah succeeds in getting restitution, he said, there isn’t a plan yet for spending that money.

The state is concerned about the “significant and substantial ongoing harm to a significant number of Utahns,” Brown said, and that is why it filed the lawsuit in 3rd District Court.

He had a message for the young men who are the “targets of these online trading apps” about Kalshi and similar companies.

“They’re not your friends. They’re not helping you invest. They’re not providing you with insight or opportunity,” Brown said. “Frankly, they are engineered to do one thing and one thing alone, and that is empty your wallet.”

He urged people who are losing money to stop and seek help through the National Problem Gambling Helpline by calling or texting 1-800-697-3738 or visiting 1800myreset.org.

Part of a national fight

The lawsuit follows a legal dispute with Kalshi, which tried to settle the legal question earlier this year when it preemptively sued Utah, alleging the federal government’s Commodity Futures Trading Commission has authority over the markets Kalshi runs.

In August, a federal judge sided with the state in its case against Kalshi, further advancing Utah’s ability to regulate prediction markets in the state.

Kalshi appealed that decision to the 10th U.S. Circuit Court of Appeals and sought to block enforcement of Utah’s laws during the appeal. The court denied that order last month, and the appeal is still pending.

Utah is not the only state battling Kalshi.

Red and blue states alike have sued to take on the company and other prediction markets. Several are locked in litigation over whether the prediction markets are subject to state gambling regulations.

In July, Brown joined 43 other attorneys general in signing a letter attacking the platforms as a “new form of casino” that companies use to “manipulate others” — namely young people who are “particularly vulnerable.”

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