Utah Wants Millions From ‘Back-Alley Gambling Den’ Kalshi for Allegedly Running Illegal Gambling Business

Utah Attorney General Derek Brown filed a lawsuit Tuesday against prediction market platform Kalshi, several of its subsidiaries, and two financial trading firms that work with the company, accusing them of violating the state’s anti-gambling laws. The state compares Kalshi to a “back-alley gambling den,” arguing that the company facilitates bets and takes a percentage of the money wagered on its platform. Utah is asking a court to block Kalshi from offering wagers in the state, to require a court-approved geolocation service to prevent Utah residents from placing bets, and to recover millions of dollars the company allegedly made from illegal gambling. According to the lawsuit, Kalshi has collected an estimated $30.6 million to $61.2 million in fees from wagers placed by Utah users. Utah is the latest state to take legal action against Kalshi as the company and rival Polymarket face a growing wave of lawsuits over allegations that they are operating illegal gambling businesses. At the center of these legal battles is whether the platforms’ event contracts are federally regulated financial products or wagers subject to state gambling laws. Prediction markets allow users to buy and sell contracts based on the outcomes of future events, from sporting events and elections to the weather. The Trump administration, meanwhile, seems to be backing prediction markets, with the U.S. Commodity Futures Trading Commission (CFTC) pushing back against states trying to regulate the industry. For example, New York Gov. Kathy Hochul and Attorney General Letitia James announced on July 31 that the state was suing Kalshi; less than two weeks later, the CFTC used its emergency authority and ordered Kalshi to continue to operate in the state. In Utah’s case, the state argues there is little difference between Kalshi’s event contracts and traditional gambling. “Although Kalshi initially offered only wagers tied to traditional financial instruments, its attempted distinction between event contracts and gambling wagers has collapsed as it has embraced wagers in areas traditionally offered by sportsbooks,” the suit says. The lawsuit also points out that Kalshi has marketed itself as “The First Nationwide Legal Sports Betting Platform.” This isn’t Utah’s first legal tussle with Kalshi. Kalshi sued Utah in February 2026 to prevent the state from enforcing its anti-gambling laws against the platform, arguing that its event contracts fall under federal oversight. A federal judge sided with Utah in August, rejecting Kalshi’s argument that federal law prevented the state from enforcing its gambling restrictions. Kalshi has appealed the ruling, but a federal appeals court declined to block Utah from enforcing its laws while the appeal proceeds. Kalshi did not immediately respond to a request for comment.

(Source：Gizmodo)