Utah takes on Kalshi “back alley gambling den”

The State of Utah is suing Kalshi for what it describes as a "brazen pattern of unlawful conduct." The state is requesting that a judge compel the company to cease providing wagers in the state and authorize the use of a geolocator tool to enforce the ban.

Additionally, it demands that the prediction market platform, which is mostly used for sports betting, reimburse the millions of dollars it has received in fees on bets made by Utahns and losses incurred by locals.

The more than 32,000 Utahns who have confirmed Kalshi accounts are not the object of the case, Attorney General Derek Brown emphasized.

According to the complaint filed in state court, Kalshi is well aware that gambling is prohibited in Utah by the state's constitution. It identifies Kalshi, four of its subsidiaries, and two trading firms in Pennsylvania that supply the platform with pricing and liquidity.

Despite Utah's ban, gaming businesses continue to operate in what they see as a legal limbo. However, the state claims that Kalshi operates similarly to "the manager of a back-alley gambling den" since it encourages bets, works as the market maker on its platform, and keeps a share of each wager as remuneration.

The state contends that the corporation is more than just a third-party trading platform because it even has an organization in charge of completing and settling bets, including payouts.

According to the complaint, Kalshi initially solely provided bets connected to conventional financial instruments. However, the complaint also states that as early as 2024, when it began to offer sports trading and began using language that clearly referred to betting on the NFL and other sports, any attempt to distinguish its operations from gambling crumbled.

According to the complaint, it provided between 100,000 and 300,000 open wagers, or "markets," every day for three months throughout the summer.

The state contends that the format of bets made through any sportsbook, including proposition bets, parlays, and wagering on game point spreads, is identical to the event contracts or wagers.

There is more to Kalshi than just sports betting. The complaint lists a number of additional bets that people may make, such as:

• Elections featuring bets such as "Closest Senate race this year" and "Blue wave this year."
• Political questions such as "Who will be arrested this year?"
• Cultural bets on items like the 2027 Coachella headliners and the next James Bond.

According to the state, Utah citizens have lost $5.5 million in individual bets, and Kalshi has earned between $30.6 million and $61.2 million in fees on bets placed by Utah accounts through the fees it keeps as a portion of each wager.

Brown referred to such figures as "general numbers" and stated that additional material will be gathered by the state in anticipation of a potential civil trial. He stated that there is currently no strategy for how Utah will use the money if it is successful in obtaining restitution.

The state brought the action in 3rd District Court because it is worried about the severe and continuous harm to a large number of inhabitants.

The action comes after Kalshi filed a preemptive lawsuit against Utah earlier this year in an attempt to resolve the legal disagreement, claiming the federal government's Commodity Futures Trading Commission has jurisdiction over the marketplaces Kalshi operates.

Utah's power to control prediction markets in the state was further advanced in August when a federal judge sided with the state in its lawsuit against Kalshi.

Kalshi attempted to prevent Utah's laws from being enforced while he challenged the ruling to the 10th U.S. Circuit Court of Appeals. The appeal is still underway after the court rejected that order last month.

There are other states fighting Kalshi besides Utah. The business and other prediction markets have been sued by several states. Many are embroiled in legal disputes on whether state gambling laws apply to the prediction markets.

Source:

"Utah sues Kalshi, saying it's 'the manager of a back-alley gambling den'", Megan Banta, sltrib.com, October 20, 2026.