Utah Attorney General Derek Brown sued Kalshi and two Susquehanna trading firms in state court on Tuesday 20 October, saying the prediction market runs illegal sports and election betting in a state whose constitution bans gambling. The Kalshi lawsuit in Utah, filed in the 3rd District Court in Salt Lake City, seeks injunctions and the return of what the state estimates at $30.6 million to $61.2 million in fees taken from Utah accounts, according to The Block. These are allegations in a 63-page complaint, reported by several outlets; no court has ruled on them.
What sets this case apart is the second set of defendants. Utah does not stop at the exchange. It also names the firms that, in its telling, sit on the other side of retail customers’ trades and profit when those customers lose.
Sports and gaming lawyer Daniel Wallach described it as the first enforcement action by a state attorney general aimed at prediction-market market makers, The Block reported. The defendants, per The Block and Crypto Briefing, are five Kalshi companies (among them KalshiEX, Kalshi Klear and Kalshi Trading) plus Susquehanna International Group and Susquehanna Government Products.
Utah wants sports, election and “mentions” contracts shut off in the state
Brown announced the suit at a press conference in Salt Lake City. The complaint brings four claims: unlawful gambling, public nuisance, unjust enrichment and civil conspiracy, according to DeFiRate. Cointelegraph reported that the state alleges Kalshi has taken illegal bets in Utah since 2024.
The relief the state asks for is broad. According to DeFiRate, it wants preliminary and permanent injunctions that would bar contracts on sports, elections, politics, culture and “mentions” (markets on whether a public figure will say a given word) for anyone in Utah. “We are asking the court to stop sports, elections, politics, culture and mention bets here in Utah,” Brown said, as quoted by Cointelegraph.
To make a ban stick, Utah wants a court-approved third-party geolocation provider to check where users are. On money, it seeks restitution, damages and disgorgement of profits, The Block, Crypto Briefing and DeFiRate reported.
Two further allegations go to how Kalshi sold its product. Utah says the company advertised its contracts as legal in all 50 states, and that its sports contracts cannot be told apart from bets placed with a sportsbook, according to Crypto Briefing and DeFiRate. Utah has no licensed sportsbooks at all, DeFiRate noted, so the state is not asking Kalshi to get a licence. It wants the product gone.
Brown also spoke to users directly. “To those of you who are ensnared in this addiction, please stop,” he said, in remarks reported by The Block. The contracts, he said, are “engineered to do one thing and one thing alone, and that’s empty your wallet.” Cointelegraph quoted him describing a public nuisance that causes “a significant and substantial ongoing harm” to Utahns.
Why the suit names Susquehanna, the market maker
Most of the state fights with Kalshi so far have turned on one question: is a sports event contract a federally regulated derivative, or a bet that states can ban? Utah’s complaint adds a second line of attack that does not depend only on that label.
The argument, as The Block describes it, runs like this. Calling a wager an “event contract” does not change what is being sold. And on Kalshi, Utah says, retail users are often not trading against each other. Kalshi Trading, the platform’s own affiliate, and the Susquehanna firms take the other side of their positions and win when the users lose. In the state’s framing, that makes the business look less like a neutral exchange matching buyers and sellers and more like a house that books bets.
According to The Block, the complaint compares KalshiEX, the company that runs the platform, to “the manager of a back-alley gambling den” that hosts bets and takes a cut. Coindaro has not been able to read the filing itself.
Market makers are normal on any exchange. They post buy and sell prices so that others can trade at any time, and they earn the spread. What Utah alleges is that this structure, applied to sports and election outcomes, recreates the economics of a bookmaker. Naming the trading firms also widens who can be held liable and who might have to hand money back if the state wins. Susquehanna had not commented in any report we found.
Brown signalled that more could follow. The suit is “part of a larger investigation,” he said, according to The Block. Utah is focused on Kalshi for now, he added, and he hinted that other platforms could be targeted. He did not name any.
The state’s estimates: $30.6 million to $61.2 million in fees
The figures in the complaint are Utah’s estimates, and outlets have reported them in slightly different ways. None has been tested in court.
| What Utah estimates | Figure | Reported by |
|---|---|---|
| Fees collected from Utah accounts through 19 October 2026 | $30.6M to $61.2M | The Block |
| Same fees, based on 1 to 2 cents per wager | $30.5M to $61.1M | Crypto Briefing |
| Profits taken from Utah | $30M to $60M | Cointelegraph |
| Residents’ losses through fees and betting losses | $36M to $66M | DeFiRate |
| Utah bettors’ losses, at least | $5.5M | Crypto Briefing |
| Verified Utah accounts, as of February 2026 | nearly 33,000 (DeFiRate); more than 32,000 (Crypto Briefing) | DeFiRate, Crypto Briefing |
| Utah users Kalshi allegedly served | 32,000+ | Cointelegraph |
The spread in the fee estimate comes from the per-contract fee the state assumes. The account count, according to DeFiRate, comes from data Kalshi itself handed over. How Kalshi’s Utah revenue splits between sports, elections and other categories has not been reported.
Kalshi lawsuit in Utah: from Kalshi’s own suit to the state’s
The case has run backwards compared with most. Kalshi moved first.
On 23 February 2026, Kalshi sued Governor Spencer Cox and Brown in federal court in Utah (KalshiEx LLC v. Cox, No. 2:26-cv-00151), arguing that federal commodities law shields its contracts from state gambling law. At the time, a bill defining proposition bets had passed the Utah House and was waiting for the Senate, the Salt Lake Tribune reported.
That move failed. On 4 August, Judge Robert J. Shelby granted Utah summary judgment, ruling that the Commodity Exchange Act does not override Utah’s gambling law as applied to Kalshi’s sports contracts, the Deseret News and DeFiRate reported. “You can’t rebrand illegal gambling as a federal commodity, and today a federal judge agreed with us,” Brown said after the ruling, as quoted by DeFiRate. Kalshi said it disagreed and would appeal, Bitcoin.com News reported.
On 8 September, the Tenth Circuit (No. 26-4100) refused Kalshi’s request for an injunction while it appeals. “Kalshi has not shown these factors weigh in its favor,” the order said, as quoted by Action Network. It did not decide the preemption question, so the appeal on the merits goes on.
The 20 October filing is the state going on the offensive, in its own courts, after winning twice in the federal system. He has chosen a civil suit rather than criminal charges, even though online gambling is a third-degree felony in Utah, as Bitcoin.com News noted in August.
Kalshi says no single state should have a veto
Kalshi spokesperson Jacki McGavick told Cointelegraph that the company is “a federally regulated financial exchange, like the stock market” and that “no single state should have a veto over it.” She added that the state action “does not affect our ongoing federal litigation.”
Her statement also takes on Utah’s market-maker theory directly. “Our customers trade with each other and set the prices,” McGavick said. That is exactly what the complaint disputes, and a court will now have to test it.
Her point about the federal case matters for timing. Kalshi’s argument rests on its status as a designated contract market overseen by the Commodity Futures Trading Commission (CFTC), and the federal appeal in the Tenth Circuit is still live. Whether Kalshi will try to move the new case from state court to federal court has not been reported. Nor has any statement from the CFTC on the Utah suit, or a hearing date for a preliminary injunction.
Courts split on Kalshi, state by state
Utah’s suit lands in a fight that now covers more than a dozen states and several federal appeals courts. On 7 October, Ohio and 38 other states plus the District of Columbia filed a brief urging the Supreme Court to hear New Jersey’s case, the docket and Gaming.net show. The court results so far point in different directions.
In April, the Third Circuit sided with Kalshi against New Jersey, holding that the CFTC has exclusive jurisdiction. On 25 September, a unanimous Sixth Circuit panel went the other way on preliminary relief in cases from Ohio and Tennessee. “On the showing Kalshi made here, CFTC registration does not keep state gambling regulators out,” the court wrote, as quoted by DeFiRate. Kalshi has since asked for a rehearing, DeFiRate reported.
In August the Ninth Circuit cleared the way for Nevada’s gaming regulator to act against Kalshi in state court, Law360 reported. In Maryland, the Fourth Circuit heard argument on 7 May and no ruling has been reported; the state agreed to hold off enforcement until it decides. In Massachusetts, a state judge granted a preliminary injunction against Kalshi’s sports contracts in January, and the Supreme Judicial Court appeared skeptical of Kalshi at argument on 4 May, Gaming America reported.
Michigan gives the closest preview of what Utah is asking for. Its attorney general sued Kalshi in state court in March, and in an injunction announced on 2 September, Judge Rosemarie Aquilina of the 30th Circuit Court barred Kalshi from offering online sports wagers to people in Michigan and required it to geofence the state, with fines of $500,000 a day for violations, Lansing City Pulse reported.
The pressure is no longer only on Kalshi. Missouri has written to several platforms, and two of them chose to sue the state first, as we reported in our piece on Crypto.com and Novig’s suits against Missouri.
Crypto users meet these contracts outside Kalshi too. Coinbase has offered Kalshi’s event contracts to customers in all 50 states since January, The Block reported, and Crypto.com runs its own prediction markets through a CFTC-registered derivatives exchange (see our Coinbase review and Crypto.com review). Robinhood sources event contracts from Kalshi, ForecastEx and Rothera, an exchange it backed alongside Susquehanna, according to The Block in July. Baltimore’s August suit also named Coinbase, Robinhood and Webull as Kalshi distribution partners.
What happens next: the Supreme Court and the CFTC rule
The biggest date on the calendar is not in Utah. New Jersey has asked the US Supreme Court to review the Third Circuit’s ruling in Flaherty v. KalshiEX (No. 26-299). The Supreme Court docket shows the petition was filed on 2 September and that Kalshi’s response, first due on 8 October, is now due on 9 November 2026.
The docket lists a long run of supporting briefs for New Jersey. They come from the National Council of Legislators from Gaming States, Ohio and other states, 145 Indian tribes, the NFL, the American Gaming Association and former CFTC chair Gary Gensler, among others. No conference date has been set, so the justices will not decide whether to take the case before mid or late November at the earliest.
With appeals courts now divided, a grant would put the core question to the Supreme Court: do states keep their gambling laws when a contract trades on a CFTC-registered exchange? Utah’s suit would be shaped by that answer, though its claims about market makers and advertising go beyond it.
The CFTC is also writing its own rules. On 10 June 2026 it proposed amendments to Rule 40.11 that would review event contracts case by case under a “public interest” test, with no outright ban on any category, according to a Milbank summary. Contracts on aggregate sports outcomes were viewed favourably, while markets on player injuries, officiating, youth sports and discrete in-game events would likely be barred. Whether a final rule has been adopted is not known. A CFTC rule can shape what Kalshi lists, but whether federal law pushes aside state gambling bans is a question for the courts.
Event contract or bet: the question at the heart of the case
An event contract pays a fixed amount, typically $1, if something happens and nothing if it does not. Its price, between 0 and 100 cents, works as the market’s implied probability. Kalshi lists them on its exchange; Polymarket offers a comparable product.
Kalshi’s case is that these are derivatives, like futures on interest rates or the weather, and that Congress gave the CFTC sole say over them. The states answer that a contract paying out on whether a team wins is a sports bet, whatever the wrapper. Utah now adds a third point: if the platform’s affiliate and its trading partners are the counterparty to retail users, the business resembles a bookmaker taking the other side.
For a reader in a US state that bans sports betting, the practical risk is that access can change quickly: a court order or a geolocation block could cut off markets with open positions. Nothing here is a view on whether to trade these contracts.
What is still unknown
- The case number, and whether the complaint is posted publicly online.
- How Kalshi and the Susquehanna firms will respond, and whether they will try to move the case to federal court.
- When a hearing on Utah’s request for a preliminary injunction will take place.
- Whether Utah’s wider investigation will reach Polymarket or other platforms, which Brown hinted at without naming any.
- Whether the CFTC will comment on, or intervene in, the Utah case.
The next fixed date is 9 November, when Kalshi’s reply to New Jersey’s petition is due at the Supreme Court.