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Utah sues Kalshi and two Susquehanna trading firms, calling the prediction market an illegal gambling business
Summary
Utah Attorney General Derek Brown sued Kalshi on Tuesday, naming five Kalshi companies along with Susquehanna International Group and Susquehanna Government Products and accusing them of running an illegal gambling business in the state, The Block and Cointelegraph reported.
The state wants the companies to give back money it says they made illegally, compensate the state and residents, and pay damages, and it is asking the court to stop sports, election, politics, culture and “mentions” bets in Utah, with tighter location checks to enforce that, according to both outlets.
The complaint goes after the market makers as well as the platform: it alleges Kalshi Trading and the Susquehanna firms act like a betting house by taking the other side of users’ bets, which sports and gaming attorney Daniel Wallach told The Block makes it the first state attorney general action aimed at prediction-market market makers.
The outlets describe the money at stake slightly differently: The Block says Utah estimates Kalshi collected $30.6 million to $61.2 million in fees from Utah accounts through Oct. 19 and that the true figure could be much higher or lower, while Cointelegraph says Utah wants about $30 million to $60 million in profits returned.
Kalshi did not immediately respond to Cointelegraph’s request for comment, and Brown said the case is “part of a larger investigation” that could reach other platforms, The Block reported.
Key facts
- The complaint compares KalshiEx, which runs the platform, to “the manager of a back-alley gambling den” that hosts bets and takes a cut, The Block reported.
- Brown alleged Kalshi illegally offered its services to more than 32,000 users in Utah, Cointelegraph reported.
- Kalshi sued Utah in February after lawmakers passed a bill treating prediction-market bets as gambling; in August a judge ruled federal CFTC law does not preempt state gambling laws, and an appellate court denied Kalshi an injunction in September, according to Cointelegraph.
- The suit follows August lawsuits from Connecticut and Baltimore over alleged unlicensed sports betting; Baltimore also sued Kalshi distribution partners Coinbase, Robinhood and Webull, The Block said.
- Cointelegraph said Arizona is the only state pursuing criminal charges against Kalshi, while the U.S. Supreme Court is weighing whether to take up New Jersey’s case, which could settle whether states or the CFTC have authority over event contracts.