Utah's Attorney General has taken legal action against Kalshi and two Susquehanna trading firms for purported violations of state gambling regulations. Filed in the Third District Court of Utah on October 20, the lawsuit seeks $61.2 million in damages, along with additional monetary and injunctive relief.
The complaint aims to prevent Kalshi from engaging in the trading of event contracts tied to sports and politics within Utah, as well as from retaining profits earned through these allegedly illicit transactions.
Court documents reveal that Kalshi has facilitated approximately $3 billion in trades from Utah-based users, which is estimated to have generated between $30.6 million and $61.2 million in fees for the company.
Kalshi contests Utah's claims, stating that it operates under a license from the Commodity Futures Trading Commission (CFTC) and does not function as a gambling entity. A spokesperson for Kalshi emphasized that the firm is overseen by the CFTC and that trading occurs only among clients, with prices established during the trading process.
The heart of the dispute lies in whether states can enforce their gambling laws on event contracts provided by federally regulated prediction markets. This latest complaint is a sequel to a ruling in August by US District Judge Robert J. Shelby, who sided with Utah in its legal confrontation with Kalshi. The judge concluded that the Commodity Exchange Act (CEA) does not prohibit Utah from enforcing its gambling regulations in cases pertaining to Kalshi’s sports event contracts, marking a significant blow to Kalshi’s position that federal oversight protects its offerings from state gambling enforcement.
