Utah Sues Kalshi Over Alleged Illegal Gambling

Utah has sued prediction market Kalshi in state court for breaking Utah’s gambling laws, estimating the company has collected $30.6 million-$61.2 million in fees from wagers placed by Utah accounts. Attorney General Derek Brown announced the lawsuit at the Utah Capitol on October 20, 2026.

The complaint, filed in 3rd District Court, accuses Kalshi of a “brazen pattern of unlawful conduct” and asks a judge to stop it offering wagers in the state and to approve a geolocation tool to enforce the ban. It names Kalshi, four of its subsidiaries and two Pennsylvania-based trading companies that provide pricing and liquidity for the platform.

Brown said the case targets the companies, not the more than 32,000 Utahns with verified Kalshi accounts. “Let me be clear: It’s against the companies,” Brown said. “It’s not against you.”

Banned by the Utah Constitution

Gambling is banned by the Utah Constitution, and Brown pointed out that Utah is one of only two states where that is true. “Kalshi runs an online casino in Utah and calls it a prediction market. That violates Utah law,” he said in a statement.

Kalshi and other prediction markets argue that their event contracts are financial swaps overseen by a federal regulator, the Commodity Futures Trading Commission. Utah’s complaint rejects that, saying Kalshi behaves like “the manager of a back-alley gambling den” because it hosts the events and takes a cut of every amount gambled.

The state also points to the Kalshi entity that settles contracts and makes the payouts. “It is administering a closed-loop wagering system,” the complaint reads, “where it creates the games, handles the bets, and pays out the winners.”

Sports Bets Under Another Name

According to the complaint, Kalshi started out offering wagers tied to traditional financial instruments, but any distinction from gambling “collapsed” as early as 2024 once it moved into sports. The state says Kalshi was taking gambling bets from Utahns by at least September 2024, and that around 80% to 90% of wagers on the app are on sporting events.

The complaint argues the contracts work like the bets at any online sportsbook, calling them “indistinguishable from the format of bets offered through any sportsbook,” right down to proposition bets, parlays and point spreads. It also quotes Kalshi’s own marketing tagline, “Sports Betting Legal in All 50 States on Kalshi.”

Elections, Coachella and James Bond

Sports are not the whole list. The complaint spells out election and political markets such as “Closest Senate race this year?”, plus culture markets on who will headline Coachella in 2027 and who will be the next James Bond.

The Money Utah Wants Back

The fee estimate rests on a charge of $0.01 to $0.02 per wager and more than $3 billion in wagers from Utah accounts across Kalshi’s lifetime. The state also estimates Utahns have lost $5.5 million in individual wagers. Brown called those “general numbers” and said discovery should show more.

He saved his bluntest words for the young men he described as the “targets of these online trading apps.” “They’re not your friends. They’re not helping you invest. They’re not providing you with insight or opportunity,” Brown said. “Frankly, they are engineered to do one thing and one thing alone, and that is empty your wallet.”

Brown urged anyone losing money to stop and seek problem gambling support through the National Problem Gambling Helpline, by calling or texting 1-800-697-3738 or visiting 1800myreset.org.

Kalshi Already Lost Round One

Kalshi sued Utah first, in February 2026, naming Gov. Spencer Cox and Brown and arguing that the federal Commodity Exchange Act stops Utah from regulating its platform. In August, U.S. District Judge Robert J. Shelby granted Utah summary judgment, so Kalshi had already lost in federal court before the state sued. On September 8 the Tenth Circuit refused to block enforcement while Kalshi appeals, and that appeal is still pending.

Kalshi spokesperson Jacki McGavick said in a statement: “Kalshi is a federally regulated financial exchange, like the stock market. Our customers trade with each other and set the prices.” She added that the state court action does not affect the company’s ongoing federal litigation. Company spokespeople have previously called similar lawsuits “political theater.”

A National Fight

Red and blue states alike have sued Kalshi and other prediction markets, according to The Salt Lake Tribune. In July, Brown joined 43 other attorneys general in signing a letter attacking the platforms as a “new form of casino.”

Offering online gambling to anyone in Utah is a third-degree felony. Asked about criminal charges, Brown told reporters his office does not comment on existing or potential criminal investigations.