TL;DR:
- The Utah Attorney General’s Office filed a civil lawsuit against five Kalshi entities and two Susquehanna firms for operating illegal gambling within the state.
- State authorities are seeking restitution ranging between $30.6 million and $61.2 million in fees collected from local users through October 19, 2026.
- The legal action marks the first time institutional market makers have been named in state litigation against event prediction platforms.
It was announced this Tuesday that Utah will sue Kalshi and two entities tied to Susquehanna. Derek Brown, the state’s Attorney General, shared the information, adding that the platform stands accused of running an unlawful gambling business within the state’s jurisdiction.
The complaint argues that the technical label of “event contracts” used by the company does not alter the actual nature of the services provided to consumers. According to the filing, the operating subsidiary KalshiEx functions in the same manner as an operator of illicit gambling dens, facilitating wagers and keeping a cut on every executed transaction.
Unlike earlier legal challenges in other jurisdictions, Utah’s legal strategy directly targets liquidity providers. The filing names Susquehanna International Group and Susquehanna Government Products, alleging that these firms worked alongside Kalshi Trading by taking the counterparty side of wagers placed by retail users and pocketing the capital whenever those positions ended at a loss.
Addressing the matter, Daniel Wallach, an attorney specializing in sports and gaming law, stated that this case sets the first formal precedent in which a state attorney general includes market makers in a lawsuit brought against prediction platforms.
Preliminary estimates provided by state analysts suggest the platform collected between $30.6 million and $61.2 million in fees from accounts registered in Utah through October 19, 2026. However, a judicial source noted that the final figure may change as preliminary proceedings unfold.
The petition seeks financial compensation for affected residents alongside the imposition of punitive damages. In addition, the attorney general’s office demanded the immediate suspension of contracts tied to sports competitions, political elections, pop culture trends, and public mention metrics.
To ensure compliance with these restrictions, the state asked for the rollout of strict geolocation controls. The lawsuit argues that the current geographic verification mechanisms are inadequate to keep users located within Utah’s borders from gaining access.
Regulatory Crackdown and Legal Precedents Facing Prediction Markets
During his public remarks, Brown criticized the commercial architecture of these platforms, highlighting the risks posed to younger audiences. The attorney general maintained that these offerings are neither investment vehicles nor financial analytical tools, but rather designs engineered to drain user funds.
This legal challenge intensifies the mounting scrutiny the sector faces across several American courts. In August 2026, authorities in Connecticut and the City of Baltimore launched lawsuits against Kalshi over alleged unlicensed sports gambling operations. In the Baltimore action, retail distribution partners including Coinbase, Robinhood, and Webull were also named.
The stance taken by local regulators gained judicial backing in September 2026. At that point, a federal appeals court ruled that the states of Ohio and Tennessee retain the legal authority to enforce their state gaming statutes against Kalshi, rejecting the company’s claim that federal derivatives oversight preempts state powers. Meanwhile, Kalshi strongly rejected the judicial finding, signaling plans to file appeals to overturn the decision before higher courts.
State investigators stated that the Utah complaint does not preclude further legal measures. According to the attorney general’s official release, these steps are part of an active inquiry that could expand to include other platforms operating under comparable models.
The state court will issue the calendar in the coming weeks detailing the filing deadlines for Kalshi and the Susquehanna group to submit their formal replies.
