Utah Sues to Shut Down Kalshi After Winning First Federal Court Fight

Utah already beat Kalshi in federal district court, and now it is asking a state judge to shut down the exchange’s betting business within its borders and recover money.

Attorney General Derek Brown filed a civil lawsuit Tuesday against Kalshi entities and two Susquehanna entities, alleging unlawful gambling, public nuisance, unjust enrichment and civil conspiracy. The complaint seeks preliminary and permanent injunctions, court-approved third-party geolocation controls, restitution, damages and disgorgement.

The case reaches beyond sports. Utah wants to stop contracts tied to elections, politics, culture and mentions as well, making this a broader challenge to Kalshi’s business than a demand to remove its sports event contracts.

“Utah has said no to gambling since statehood in 1896, and that didn’t change when betting moved onto cell phones,” Brown said at Tuesday’s announcement.

Utah points to millions in alleged losses

The state said Kalshi had nearly 33,000 verified Utah accounts as of February, citing data supplied by the company. It alleges residents lost between $36 million and $66 million through transaction fees and betting losses. Those figures are Utah’s claims, not court-established losses or a judgment against the company.

The complaint argues that Kalshi’s sports event contracts are “indistinguishable” from sportsbook wagers. It also accuses the company of advertising its betting activity as legal in all 50 states despite Utah’s prohibition.

Brown described the platform as causing “significant and substantial ongoing harm” to Utah residents. The public-nuisance claim gives the state another legal basis for seeking an injunction, alongside its allegations that the products violate gambling laws.

Utah is asking for more than a declaration that the contracts are unlawful. It also seeks a court-approved outside provider to enforce geographic restrictions and financial remedies to recover money tied to the alleged conduct. 

Kalshi sued first and lost in district court

Tuesday’s filing is a new enforcement action, not Utah’s first courtroom encounter with the exchange.

Kalshi sued Utah officials in February, arguing that the Commodity Exchange Act and its status as a federally registered exchange prevented the state from applying its gambling laws to its sports contracts. U.S. District Judge Robert J. Shelby rejected that argument in August, granted summary judgment to Utah and ordered the case closed.

That distinction matters. The earlier ruling resolved Kalshi’s federal district court challenge to state enforcement. It did not award Utah the financial recovery or broad injunction now sought in the separate state lawsuit.

According to the attorney general’s account of the ruling, Shelby emphasized that states have traditionally regulated gambling and rejected the idea that Congress quietly displaced that authority through legislation addressing the financial crisis.

“You can’t rebrand illegal gambling as a federal commodity, and today a federal judge agreed with us,” Brown said when the ruling was announced.

Kalshi has argued that its products are contracts traded on a federally regulated exchange, with the Commodity Futures Trading Commission (CFTC) exercising exclusive jurisdiction. Utah argues that federal registration does not take activity prohibited by its gambling laws beyond the state’s reach.

A broader fight than sportsbook licensing

Utah’s case differs from states that require prediction markets to obtain sports wagering licenses.

Utah has no regulated sportsbook market for Kalshi to join. Utah bans all forms of gambling, and the new complaint seeks to stop multiple categories of event contracts rather than move them into a state licensing system.

That makes the scope of the requested injunction important. Even a retreat from sports would not necessarily satisfy the relief Utah is requesting as the complaint also targets:

• Cultural

• Election

• Mention

• Political

For Kalshi, the dispute therefore tests more than whether sports contracts resemble bets. It tests how much of its exchange a state with a comprehensive gambling prohibition can exclude.

The national fight moves toward Supreme Court

Utah’s enforcement action arrives as related cases create pressure for a national answer.

The Sixth Circuit Court of Appeals ruled against Kalshi in the Ohio and Tennessee disputes last month. Kalshi requested panel rehearing and rehearing by the full court earlier this month, arguing that the decision’s treatment of federal preemption and swaps conflicts with other rulings and should be reconsidered in light of new CFTC rulemaking. 

Meanwhile, New Jersey asked the U.S. Supreme Court to review the Third Circuit’s pro-Kalshi ruling. Supporters have urged the justices to take that case alongside related Nevada petitions and settle the federal-versus-state jurisdictional question. The court has not granted review, and Kalshi’s response in the New Jersey case is due Nov. 9.