Kalshi sues to block Utah from cracking down on prediction markets
Kalshi, the online prediction market, filed suit against Utah Gov. Spencer Cox, Attorney General Derek Brown, and AG’s office officials in federal court, saying the state is laying the groundwork to kick the exchange out of Utah under anti‑gambling laws.
In Monday's filing, Kalshi says the state is preparing to bring an enforcement action against the company for violating the state’s anti-gambling laws. The suit cites recent public comments from Cox and Brown that the company is operating illegally in Utah.
“Just last week the Governor said, ‘I think you’re going to see 50 states suing these guys in one way or another,’ and that businesses like Kalshi are ‘illegal in Utah and will continue to be so,’” the suit says. It also points to a recent op-ed by Brown that names Kalshi and says he’s working on a plan to target prediction markets in the state.
Brown has joined amicus briefs backing other states’ cases against Kalshi, arguing its sports-event contracts amount to illegal sports betting under state law, including Utah’s.
Kalshi says outreach to Brown’s office was met with silence, which is evidence, they argue, of imminent enforcement that could include criminal charges or an effort to force the exchange out of Utah.
The company is asking for a judge to step in and rule that Utah can’t treat its exchange as illegal gambling and an injunction blocking the state from taking any action.
As Dustin Gouker noted in his Event Horizon newsletter, prediction markets have sued after cease‑and‑desist letters before, but this is the first time Kalshi filed suit before a state pulled the trigger.
Online prediction markets like Kalshi and Polymarket let users trade “yes/no” contracts on real‑world events. Users trade with each other, not the house, and every “yes” has a corresponding “no.”
For example, a “yes” contract trading at 30 cents reflects a 30% implied chance of the event happening, and traders buy and sell before the event is resolved. If the event occurs, people holding “yes” contracts get the full value, and people holding “no” get nothing. If it doesn’t, the opposite happens.
They’ve also drawn heat for alleged insider trading: in January, an anonymous trader cleared more than $400,000 betting on Nicolás Maduro’s ouster—much of it hours before the raid that led to his capture.
In the suit, the company contends that Utah cannot take steps to shut down their operations in the state because that would violate federal law, which gives the Commodity Futures Trading Commission (CFTC) exclusive authority to regulate their business.
Last week, the CTFC chair, Michael Selig, moved to curb state efforts to regulate online prediction markets, saying the platforms aren’t gambling—they’re trading.
“The CFTC will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products,” Selig said in an op-ed published in the Wall Street Journal.
Gambling is already prohibited under Utah’s Constitution. HB243 from Rep. Joseph Elison, R-Toquerville, expands the definition of gambling to include proposition bets, but it’s unclear whether that would include prediction markets.
In January, CNBC reported analysts think a big chunk of prediction market growth comes from 18‑to‑20‑year‑olds who are too young to gamble legally in most states. Kalshi and Polymarket generally allow users 18 and up, with some exceptions.
President Donald Trump and his family have significant financial entanglements with online prediction markets. A venture capital firm backed by Donald Trump Jr. made an investment in Polymarket last year, and Kalshi named Trump Jr. as a strategic advisor in January. Last October, President Trump’s TruthSocial is also rolling out its own prediction market, dubbed “Truth Predict.”
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