Utah Attorney General Derek Brown filed a lawsuit against prediction market platform Kalshi on Tuesday, seeking to block the company from taking bets from Utahns. The lawsuit, filed in 3rd District Court, alleges Kalshi has been violating state law and the Utah Constitution, which prohibits gambling in all forms.
The complaint accuses Kalshi of maintaining a brazen pattern of unlawful conduct that has caused serious harm to Utah and its residents, including gambling-related harm to mental health. The Attorney General’s Office is asking a judge to force the company to pay the state unjustly acquired profits, along with restitution for other damages deemed fair by the court.
According to the complaint, Kalshi and its affiliates act like a manager of a back-alley gambling den by hosting and facilitating gambling events and taking a percentage fee, or rake, of amounts gambled. The attorney general’s office estimates that Kalshi has made between approximately $30.6 million and $61.2 million in fees from illegal wagers placed by Utah accounts as of Monday. This figure is based on an estimated $0.01 to $0.02 fee per wager and over $3 billion in total wagers placed by Utah accounts across Kalshi’s lifetime.
The lawsuit notes that Kalshi has more than 32,000 verified users in Utah, with more than $1 million invested on the exchange. The attorney general's office stated that Kalshi began offering gambling bets to Utahns as early as September 2024, despite being aware that such bets are illegal under state law.
In a statement issued Tuesday afternoon, Kalshi spokesperson Jacki McGavick argued that the company is a federally regulated financial exchange, similar to the stock market. McGavick stated that Kalshi answers to federal law as a national derivatives market overseen by the CFTC and that no single state should have a veto over it.
The legal action follows a recent federal order that rejected Kalshi’s argument that it does not need to adhere to Utah law. While the company has appealed that decision, the lawsuit filed by the state is now positioned to proceed in the state's district court. Brown noted that while the office is currently focusing on this civil filing, the investigation is part of a larger effort and the office will not comment on potential criminal investigations.
Brown stated that the profit estimates in the complaint could grow as the lawsuit undergoes discovery, which may provide more information regarding how the company operated in violation of Utah law.
