Utah is suing prediction market website Kalshi, claiming that Kalshi's yes/no event contracts are "indistinguishable from the bets offered by a traditional sportsbook." Following its earlier court wins, the state says the site has been operating illegally because of Utah's constitutional prohibition on gambling.
The suit, filed Oct. 20 by Utah Attorney General Derek Brown, seeks to force Kalshi to cease operations in the state and pay for the harm it has caused since at least September 2024.
"We're also asking the court to make the defendants give up the profits that they have made, to pay restitution, and to be accountable for the public nuisance that they have caused here in the state of Utah," Brown said at a news conference at the Utah State Capitol.
The state claims Kalshi and its parent enterprises have "worked together to offer, facilitate, market, and profit from gambling bets within the state." In the filing, Utah estimates that Kalshi has made $30,591,600 to $61,183,200 in "illegal wagers" placed by state-based accounts. They estimate typical Utah users' losses to be around $5.5 million.
The state's total compensation will be determined once Kalshi discloses its profits from Utah-based users, according to the Attorney General's office.
Brown's lawsuit is the latest in a legal brouhaha between Utah, other states and the prediction market giant.
Kalshi first sued Utah in February after lawmakers passed a law that added proposition bets to the state's definition of gambling, a practice explicitly prohibited in the Utah Constitution.
The company's argument boils down to its belief that oversight of its business model is not up to individual states. They argued Utah couldn't treat its sports futures contracts as bets because the company operates as a federally registered exchange governed by the Commodity Futures Trading Commission.
On Aug. 4, a federal court ruled in favor of Utah's anti-gambling laws over the online site. After that loss, Kalshi appealed to the Tenth Circuit and asked that court for an injunction to keep Utah from enforcing its laws during the appeal.
The gambit failed when the judge quickly denied the request on Sept. 8. That left the door open for Brown to act because "Utah law makes gambling illegal. It's very clear."
"Today we are asking the court to stop sports, elections, politics, culture and mention bets here in Utah, and to use a court-approved geolocation provider to enforce this," Brown said.
Prediction markets like Kalshi and Polymarket blur the lines between what is and isn't gambling. Users can place bets on everything from sports outcomes to whether the Fed will raise or lower interest rates. Economic experts say what is and isn't gambling largely comes down to a question of regulation, not content.
Brown said the focus — at least right now — is on Kalshi, not Polymarket. Representatives from the Attorney General's Office clarified that Kalshi is the only named defendant because it currently represents the biggest market share of prediction market providers.
"For other companies that are operating here in Utah, I would ask two things," Brown said. "Number one, read this complaint, and number two, we're simply asking you to follow the law."
Gov. Spencer Cox applauded the Attorney General's lawsuit and enforcement of state law in a statement.
"Kalshi is gambling. Calling it something else doesn't change what it is," he said. "We've held the line against gambling since statehood, and we're not backing down."
Religious doctrine is also at play. The leadership of the state's dominant religion, The Church of Jesus Christ of Latter-day Saints, came out strongly against sports betting and websites like Kalshi during the faith's biannual General Conference in early October.
Kalshi's statement maintained it is a federally regulated financial exchange, "like the stock market."
"Kalshi answers to federal law, and no single state should have a veto over it."
They said Utah's lawsuit does not affect the ongoing federal appeal of their initial suit against the state.
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