Utah sues Kalshi, estimates fees from state accounts at up to $61.2 million
Key Facts
Utah Attorney General Derek Brown sued Kalshi on October 20, in a new enforcement action in a dispute over applying gambling bans to prediction markets. The complaint estimates the company collected between $30.6 million and $61.2 million in fees from accounts in the state, according to Utah News Dispatch. The attorney general's office said the total damages sought would be determined after Kalshi discloses its profits from Utah residents, according to KUER radio. The lawsuit follows earlier federal litigation between the company and state officials over Utah's authority over the platform's activities. Federal Judge Robert Shelby had concluded that federal commodities law does not preempt the state's authority to ban gambling within its borders, according to the attorney general's office.
Utah's ban is rooted in a constitution that prohibits the legislature from authorizing games of chance, lotteries or gift enterprises based on chance. The constitution says the prohibition applies "under any pretense or for any purpose," according to the text published by the state legislature. Utah law classifies providing online gambling to anyone within its borders as a third-degree felony, according to the attorney general's office. Kalshi, meanwhile, says in its statement that it operates its market under federal law. Responding to the state's action, the company added that "no individual state should have the right to shut it down."
Kalshi filed suit in federal court against Utah officials on February 23, 2026, according to U.S. District Court for the District of Utah documents. The company then sought to block enforcement of state laws pending appeal. The 10th U.S. Circuit Court of Appeals rejected that request on September 8, according to Gephardt Daily. The broader split among appeals courts includes a 3rd Circuit ruling upholding the Commodity Futures Trading Commission's exclusive jurisdiction, according to a statement from the Pennsylvania attorney general's office. Taking a different approach, the 6th and 9th Circuits allowed states to regulate contracts that function as gambling, according to the same statement.
Kalshi began offering contracts tied to the outcomes of sporting events in January 2025, according to U.S. District Court for the District of Utah documents. Tarek Mansour told Reuters that sports currently account for nearly 65% of the platform's revenue. Their share was about 95% nine months earlier, according to the comparison Mansour provided in the interview. On the platform's reach within the state, Kalshi reported 32,940 fully active accounts with Utah addresses as of February, according to Axios. Those accounts are registered at addresses within the state, whose law prohibits providing online gambling to anyone within its borders.
The Commodity Futures Trading Commission itself is taking a position supporting federal preemption in its lawsuit against New Mexico. The commission says in its complaint that the federal regulatory framework preempts the application of state gambling laws to event contracts. It described that framework as one that "expressly and impliedly preempts state gambling law as applied to event contracts." That position puts the federal commission on the side of the federal regulatory primacy Kalshi asserts in opposing Utah's action. On the other side, the Utah attorney general's office relies on Judge Shelby's conclusion that the state retains authority to ban gambling within its borders.
Mansour told Reuters that the dispute over who regulates prediction markets "could ultimately end up before the U.S. Supreme Court." New Jersey's dispute with Kalshi has already reached the stage of a petition for Supreme Court review. The petition concerns a ruling by the 3rd U.S. Circuit Court of Appeals, according to the brief filed in the case. The Supreme Court granted an extension of the deadline for Kalshi to respond to the petition for review. The response is now due on November 9, 2026, according to the court's published docket.