Utah Sues Kalshi and Susquehanna Firms to Halt Alleged Illegal Betting
Published Updated 5 new reports since it was first published
Utah filed a civil lawsuit against Kalshi and two Susquehanna-linked trading firms over alleged illegal gambling activity in the state. The state is seeking injunctions, restitution and disgorgement, while also pushing to recover fees and profits tied to the disputed wagers.
What this rests on
What it means
Kalshi operates as a CFTC-registered exchange offering 'event contracts' on sports, politics and culture, a structure it has defended in federal court against a wave of state gambling regulators in Nevada, New Jersey, Arizona and Maryland. Those fights turned on whether federal commodities law preempts state gaming statutes. Utah's suit follows a pattern of states pushing back after Kalshi notched court wins elsewhere, but it widens the target list to the market makers that supply liquidity to its contracts.
A court order could force Kalshi to stop listing contracts for Utah residents entirely, covering sports, elections and cultural events, while the two Susquehanna-linked firms named in the suit may have to withdraw as liquidity providers in the state. Utah is also chasing $30.6 million to $61.2 million in fees collected from local users through October 2026, money that would otherwise sit with Kalshi and its market-making partners rather than the state treasury.
Naming the market makers alongside the exchange tests how far liability for 'illegal gambling' extends inside a trading stack: is the firm quoting prices on a contract an operator of the bet, or merely a counterparty providing depth? Utah's attorney general has called Kalshi a 'public nuisance' and a 'back-alley gambling den,' language that frames prediction markets as consumer harm rather than financial innovation, a framing Kalshi has rejected in every prior state case it has fought.
Kalshi's pending federal appeal, still open as Utah's case proceeds, will shape whether this suit survives a preemption defense that has worked for the company before. A ruling against Utah would reinforce Kalshi's national model; a win for the state would hand other attorneys general a template for suing market makers directly, not just exchanges, over contracts regulators treat as wagers rather than commodities. (per crypto.news)
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