Utah is suing Kalshi for what the state calls a \u201cbrazen pattern of unlawful conduct,\u201d 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. <\/p>\n
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.<\/p>\n
Attorney General Derek Brown stressed that the lawsuit isn\u2019t targeting the more than 32,000 Utahns who have verified Kalshi accounts. <\/p>\n
\u201cLet me be clear: It\u2019s against the companies,\u201d Brown said. \u201cIt\u2019s not against you.\u201d <\/p>\n
Gambling is illegal in Utah as part of the state\u2019s constitution<\/a> \u2014 and Kalshi<\/a> is \u201cwell aware\u201d 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<\/a> for the platform. <\/p>\n Utah\u2019s prohibition hasn\u2019t stopped gambling companies from operating in what they consider a legal gray area. Kalshi and other prediction markets claim event contracts are financial \u201cswaps\u201d sanctioned by a federal trading commission.<\/p>\n But Kalshi functions the same way as \u201cthe manager of a back-alley gambling den,\u201d 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.<\/p>\n Get Top Stories newsletter. The day\u2019s biggest stories every morning, delivered right to your inbox.<\/p>\n The company even has an entity responsible for finalizing and settling wagers, including making payouts, something the state argues means it isn\u2019t just a third-party trading platform.<\/p>\n \u201cIt is administering a closed-loop wagering system,\u201d the complaint reads, \u201cwhere it creates the games, handles the bets, and pays out the winners.\u201d<\/p>\n Attorneys representing Kalshi in a federal lawsuit against the state<\/a> did not immediately respond to a Tuesday request for comment. Company spokespeople have previously referred to similar lawsuits<\/a> as a type of \u201cpolitical theater\u201d and said states \u201ccan\u2019t just shut down a federally licensed exchange.\u201d <\/p>\n While the state is focused on Kalshi for now, Brown asked other companies using similar means to \u201cfollow Utah law.\u201d<\/p>\n (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. <\/p>\n \u2018Indistinguishable\u2019 from a traditional sportsbook<\/p>\n At first, the complaint says, Kalshi only offered \u201cwagers tied to traditional financial instruments.\u201d But as early as 2024, any attempted distinction between what it does and gambling \u201ccollapsed,\u201d the complaint adds, once it started offering sports trading and started using language specifically referring to betting on professional football and other sports.<\/p>\n Kalshi now offers \u201cnumerous\u201d types of wagers, which the company refers to as event contracts, the complaint says, and is \u201cregularly\u201d adding more. <\/p>\n 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.<\/p>\n The event contracts or wagers, the state argues, are \u201cindistinguishable from the format of bets offered through any sportsbook,\u201d including proposition bets, parlays and betting on the point spreads in games.<\/p>\n Kalshi offers more than just sports betting. The complaint spells out various other kinds of wagers people can make, including:<\/p>\n \u2022 Elections with wagers like \u201cBlue wave this year?\u201d and \u201cClosest Senate race this year?\u201d<\/p>\n \u2022 Politics with options including \u201c[President Donald] Trump\u2019s approval rating Friday\u201d and \u201cWho will be arrested this year?\u201d<\/p>\n \u2022 Culture wagers over things like who will headline Coachella in 2027 and the next James Bond.<\/p>\n \u2022 Mentions with wagers like whether Trump will mention Arizona at an investment announcement.<\/p>\n Kalshi made millions, and Utahns have lost millions<\/p>\n 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.<\/p>\n Brown called those \u201cgeneral numbers\u201d 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\u2019t a plan yet for spending that money. <\/p>\n The state is concerned about the \u201csignificant and substantial ongoing harm to a significant number of Utahns,\u201d Brown said, and that is why it filed the lawsuit in 3rd District Court. <\/p>\n He had a message for the young men who are the \u201ctargets of these online trading apps\u201d about Kalshi and similar companies. <\/p>\n \u201cThey\u2019re not your friends. They\u2019re not helping you invest. They\u2019re not providing you with insight or opportunity,\u201d Brown said. \u201cFrankly, they are engineered to do one thing and one thing alone, and that is empty your wallet.\u201d<\/p>\n 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<\/a>.<\/p>\n Part of a national fight<\/p>\n 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\u2019s Commodity Futures Trading Commission has authority over the markets Kalshi runs.<\/p>\n