Utah's Attorney General has taken legal action against Kalshi and two trading firms associated with Susquehanna, alleging violations of state gambling regulations. This lawsuit was filed on October 20th in the Third District Court of Utah, seekng $61.2 million in damages along with additional monetary and injunctive relief.
The state’s complaint calls for a court order to prevent Kalshi from trading event contracts related to sports and politics within Utah's borders, and to bar the company from retaining any profits accrued through these disputed transactions.
Legal documents reveal that users in Utah traded approximately $3 billion on Kalshi, generating estimated fees for the company between $30.6 million and $61.2 million.
Kalshi contests Utah's claims, arguing that it operates under a license from the Commodity Futures Trading Commission (CFTC) and does not function as a gambling platform. A spokesperson for Kalshi stated that the company is regulated by the CFTC, emphasizing that trades occur solely among clients, with prices determined during trading activities.
A key issue in the case involves the extent to which states can enforce their gambling laws on event contracts provided by federally regulated prediction markets. This recent action follows an August decision by US District Judge Robert J. Shelby, who ruled in favor of Utah, asserting that the Commodity Exchange Act (CEA) does not preclude the state from enforcing its gambling regulations against Kalshi’s sports event contracts. This ruling marks a significant challenge for Kalshi's position that federal oversight protects its operations from state gambling laws.
