Utah Attorney General Files Lawsuit Against Kalshi Over Illegal Betting Allegations

During a press conference on Tuesday, Brown revealed that state officials have asked the court to order these companies to forfeit approximately $30 to $60 million in profits obtained through allegedly illegal event-based contracts. The Attorney General contends that Kalshi unlawfully served more than 32,000 users in Utah, leading to considerable financial harm.

Brown stated, 'Based on Utah law, I have determined that Kalshi's operations cause ongoing and significant damage to a substantial portion of Utah residents. Therefore, we are petitioning the court to prohibit betting on sports, elections, politics, culture, and other related topics in Utah.'

Earlier this year in February, Kalshi filed a lawsuit against Utah after legislators passed a bill defining betting on prediction markets as gambling under state law. In August, a judge sided with Utah officials, ruling that federal statutes, governed by the Commodity Futures Trading Commission (CFTC), do not override state gambling regulations. Subsequently, in September, an appellate court denied Kalshi's request for an injunction, preventing the platform from operating during the appeal process.

Attempts by Cointelegraph to obtain comments from Kalshi regarding the lawsuit did not yield an immediate response.

This civil lawsuit is part of a wider series of actions taken by various U.S. states against prediction market platforms like Kalshi and Polymarket, citing state gambling law breaches, many of which involve sports wagering. While Arizona remains the only state pursuing criminal charges against Kalshi, civil complaints have been filed by Michigan, Ohio, Kentucky, Nevada, Massachusetts, Wisconsin, New York, and others targeting one or more such platforms.

The Utah case unfolds as the U.S. Supreme Court contemplates whether to accept New Jersey’s petition to review its own legal battle against Kalshi over alleged illicit sports betting. Should the Supreme Court hear the case, it may ultimately determine if prediction market operations fall under state regulatory authority or are exclusively governed by the CFTC, which asserts sole jurisdiction over these event contracts.

This legal confrontation underscores an ongoing national debate over regulatory control and legality of prediction market platforms, highlighting the significant economic and legal implications for users and companies operating within ambiguous gambling frameworks.

The lawsuit illustrates the complex interplay between federal oversight and state legislation in regulating emerging financial betting platforms, with outcomes potentially setting precedents impacting the industry nationwide.