During a Tuesday press briefing, Attorney General Brown revealed that Utah officials have officially petitioned a state court to compel the involved companies to disgorge and return approximately $30 million to $60 million in profits. According to the state’s legal filing, these profits were amassed through event contracts that state authorities maintain are illegal under local law. The Utah attorney general further alleged that Kalshi unlawfully opened its platform and offered its services to more than 32,000 users residing within the state, resulting in significant financial losses for local participants.
"Under Utah law, I have determined that this operation is causing a significant and substantial ongoing harm to a significant number of Utahns," Attorney General Brown stated during the briefing. "And so today, we are asking the court to stop sports, elections, politics, culture, and mention bets here in Utah."
The legal showdown between Utah and Kalshi is the culmination of escalating tensions that have been brewing for months. The dispute spilled over into the courts in February, when Kalshi took legal action against the state of Utah. That move by the prediction market came after state lawmakers passed a specific bill classifying betting on prediction markets as a form of gambling under local statutory law.
The legislative move set the stage for a judicial battle over jurisdiction and state versus federal authority. In August, a state judge delivered a major victory to Utah officials, ruling that federal laws under the oversight of the US Commodity Futures Trading Commission (CFTC) do not preempt or supersede state-level gambling laws. Following that ruling, Kalshi sought emergency relief to continue its operations while challenging the decision. However, in September, an appellate court officially denied Kalshi’s request for an injunction, effectively maintaining the blockade that prevents the platform from lawfully operating within the state while its appeal moves through the judicial system.
Responding to the sweeping new civil lawsuit and the demand for the return of millions in profits, Kalshi defended its operational framework and maintained its status as a federally regulated entity.
"Kalshi is a federally regulated financial exchange, like the stock market," Kalshi spokesperson Jacki McGavick said in a statement provided in response to the Utah lawsuit. "Our customers trade with each other and set the prices. As a national derivatives market overseen by the CFTC, Kalshi answers to federal law, and no single state should have a veto over it. This latest state court action does not affect our ongoing federal litigation."
Ongoing legal battles across the US
The high-stakes civil lawsuit filed by Utah is far from an isolated incident. Instead, it represents just one front in a sprawling national wave of litigation launched by US state authorities against prominent prediction market platforms, including Kalshi and Polymarket. State regulators across the country have increasingly trained their sights on these platforms over alleged violations of state-level gambling laws, with a substantial portion of the scrutiny directed at event contracts tied to sports betting and political outcomes.
Regulatory pressure varies significantly from state to state, ranging from civil enforcement actions to rare criminal measures. For instance, officials in Arizona currently stand out as the only enforcement authorities in the United States pursuing active criminal charges against Kalshi over gambling violations. Meanwhile, a broad coalition of other states—including Michigan, Ohio, Kentucky, Nevada, Massachusetts, Wisconsin, and New York—have chosen to pursue civil suits against one or more prediction market companies, seeking to halt operations and enforce local gambling restrictions.
The aggressive legal action taken by Utah arrives at a critical juncture for the entire prediction market industry, coinciding with deliberations at the highest judicial level in the United States. The US Supreme Court is currently considering whether to formally accept a petition to weigh in on a separate, high-profile legal battle initiated by New Jersey authorities against Kalshi over allegedly illegal sports bets.
If the nation’s highest court ultimately decides to take up the case, the resulting decision could have profound and far-reaching implications. It has the potential to definitively resolve a core jurisdictional conflict: whether prediction market companies and their dynamic event contracts fall squarely under the regulatory purview of state authorities and local gambling prohibitions, or whether they are governed exclusively by the CFTC, which has consistently asserted "exclusive jurisdiction" over the platforms. As these battles play out simultaneously in state courts, federal circuits, and potentially the Supreme Court, the future operational landscape for prediction markets in the United States hangs in the balance.
