During a press briefing on Tuesday, Attorney General Brown revealed that Utah officials have officially petitioned a state court to compel the defendants to disgorge an estimated $30 million to $60 million in profits. According to the state’s legal filing, these profits were amassed through event contracts that Utah regulators classify as illegal gambling. Brown alleged that Kalshi knowingly and unlawfully offered its platform services to more than 32,000 users residing within the state, ultimately resulting in substantial 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 Utah lawsuit represents the latest chapter in a bitter jurisdictional and legal feud between the prediction market and state authorities. The conflict traces back to February, when Kalshi took legal action against Utah after state lawmakers enacted legislation explicitly classifying betting on prediction markets as illegal gambling under local law. The legislative move set the stage for a judicial showdown over whether state-level gambling prohibitions can override federally overseen financial products.
In August, a state judge delivered a major victory to Utah officials, ruling that federal laws governed by the US Commodity Futures Trading Commission do not preempt state-level gambling statutes. The legal pressure intensified in September when an appellate court denied Kalshi’s motion for an injunction. That ruling effectively blocked the prediction platform from operating within the state while its broader legal appeal moves forward.
In response to the newly filed lawsuit, Kalshi pushed back against the state’s characterization of its platform, emphasizing its federal status and oversight. Jacki McGavick, a spokesperson for Kalshi, defended the platform’s operations in a statement to Cointelegraph.
"Kalshi is a federally regulated financial exchange, like the stock market," McGavick said. "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 civil lawsuit filed by Utah is far from an isolated incident. Instead, it is part of a broad wave of legal actions initiated by authorities across the United States against prediction market platforms such as Kalshi and Polymarket. State regulators nationwide have increasingly targeted these platforms over alleged violations of state gambling laws, with a particular focus on sports betting and political event contracts.
While civil litigation has become the primary tool for states seeking to curb or regulate prediction markets, the enforcement approaches vary significantly by jurisdiction. Officials in Arizona remain unique in the US landscape for pursuing criminal charges against Kalshi over its operations. Meanwhile, a growing roster of other states—including Michigan, Ohio, Kentucky, Nevada, Massachusetts, Wisconsin, and New York—have initiated civil lawsuits against one or more prediction market companies, signaling a coordinated, multi-state pushback against the industry.
The timing of Utah’s lawsuit coincides with a critical juncture for the broader prediction market sector. The case arrives as the US Supreme Court weighs whether to accept a petition to intervene in a parallel legal battle originating from New Jersey. That dispute centers on New Jersey’s own aggressive enforcement efforts against Kalshi over allegedly illegal sports bets offered on the platform.
If the nation’s highest court decides to take up the New Jersey case, the resulting decision could have profound, nationwide implications. A Supreme Court ruling could finally resolve the fundamental jurisdictional tension between state authorities seeking to protect local gambling laws and the CFTC, which maintains that it holds "exclusive jurisdiction" over the event contracts offered by federally designated contract markets. Until the judiciary provides clarity, prediction markets and state regulators will likely remain locked in a high-stakes legal struggle over the future of decentralized event wagering in the United States.
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