Utah is asking a state court to stop Kalshi’s event contracts and recover money allegedly collected through illegal gambling. Sam McQuillan reports that Attorney General Derek Brown filed the lawsuit after a federal judge rejected Kalshi’s effort to block Utah’s gambling laws. The complaint puts the fees paid by residents at the center of a dispute often described in terms of regulatory jurisdiction.
According to the complaint, Kalshi collected between $30.6 million and $61.2 million in fees from Utah customers. More than 32,000 residents had verified accounts as of February. Those figures are allegations reported by Legal Sports Report, an industry trade publication. The fee estimate is not a measure of customers’ net betting losses.
Utah prohibits virtually all gambling, including sports betting, casinos and lotteries. Kalshi sells event contracts, bets on whether something happens, as federally regulated financial products. It argues that the Commodity Futures Trading Commission has exclusive authority over them. That position would let the platform serve residents despite the state’s decision to prohibit the underlying activity.
Utah wants the contracts withdrawn, court-approved controls that check customers’ locations, and surrender of allegedly unlawful profits. The suit also names Kalshi affiliates and the trading firms Susquehanna International Group and Susquehanna Government Products. Residents paid the disputed fees; the reporting does not establish whether any recovery would reach individual customers.
A federal district judge ruled in August that federal commodities law did not displace Utah’s gambling laws. The Tenth Circuit subsequently denied Kalshi’s request for an injunction while it appealed. Other appeals courts have split over state authority, and New Jersey has asked the Supreme Court to intervene. Utah’s new lawsuit seeks enforcement and recovery, but the claimed proceeds have yet to be established in court.