Utah has taken its fight with Kalshi out of federal court and into its own. On October 20, 2026, Attorney General Derek Brown filed a civil lawsuit in Utah’s Third District Court against KalshiEx LLC and two trading firms affiliated with Susquehanna.
The state’s core allegation: the companies kept offering sports and event contracts to Utah residents even after a federal judge confirmed Utah’s right to enforce its gambling ban.
What Utah is asking for
The complaint goes well beyond asking for a cease-and-desist. Utah wants injunctive relief that would cut off residents’ access to the contracts in question.
It also seeks restitution for losses Utah residents suffered on the platform. On top of that, the state wants disgorgement, meaning the companies would have to hand over profits earned from services the state says were offered unlawfully.
Finally, Utah is asking the court to declare the platforms a public nuisance.
Kalshi has more than 32,000 verified accounts registered to Utah residents, according to the research findings tied to the case.
Estimated platform fees from those users range between $30.6 million and $61.2 million.
Why the market makers are in the crosshairs
The inclusion of Susquehanna-affiliated firms is arguably the most interesting part of the suit. Utah alleges that market makers helped keep the wagering going despite Kalshi’s loss in federal court.
In a prediction market, market makers keep contracts liquid so users can actually place and exit positions. Utah’s theory is that the betting could not have continued at this level without the firms supplying that liquidity.
How the legal road got here
In February 2026, Kalshi went to federal court to challenge Utah’s laws preemptively, hoping to head off enforcement before it started.
On August 4, 2026, a federal court ruled that the Commodity Exchange Act does not override Utah’s gambling prohibitions as they apply to sports-related contracts.
Kalshi then sought an injunction pending appeal from the 10th Circuit. On September 8, 2026, the appeals court denied that request, which cleared the way for state enforcement to move forward while the appeal continues.
Utah’s long history with gambling
The state constitution has prohibited gambling since Utah achieved statehood in 1896. Online gambling is classified as a third-degree felony in the state.
The 2026 legislative session clarified that Utah law covers proposition bets, the kind of wagers tied to specific outcomes within a game rather than the final result.
What this means for prediction markets
For Kalshi, the immediate risk is financial and operational. If Utah wins disgorgement and restitution, the bill could reach into the tens of millions based on the estimated fee range alone.
An injunction would also force the company to wall off Utah users entirely. With more than 32,000 verified accounts in the state, that is a meaningful slice of customers to geofence away.
The broader stakes are about precedent. Prediction markets have grown quickly by arguing that their contracts are financial instruments under federal oversight rather than bets under state law. Utah’s federal court win, followed by this state-level suit, chips away at that position.
The market maker angle adds a second layer of concern. Utah’s complaint treats liquidity providers as active participants, which could prompt liquidity providers to reassess where and how they engage with event contracts.
Disclosure: This article was edited by Estefano Gomez. For more information on how we create and review content, see our Editorial Policy.