Utah Sues Prediction Market Kalshi Over Illegal Gambling—Seeks Closure of Sports Betting and Up to $60 Million in Damages

Major Lawsuit and Huge Refund Claims by State Judicial Authorities

Utah Attorney General Derek Brown announced at a press conference that he has filed a civil lawsuit against Kalshi, the operator of a prediction market platform, and its affiliated companies, as well as two trading firms linked to Susquehanna.

Image sourced from KUTV 2 News Salt Lake City: "Utah Attorney General Derek Brown announces legal action regarding online gambling"

According to the complaint filed in the Third District Court of Utah, the company has illegally offered betting contracts targeting sports, politics, elections, and cultural events to over 32,000 certified users in the state since 2024. Attorney General Brown criticized the company's operations as a "public nuisance" and strongly condemned it for causing significant economic losses and substantial harm to state residents.

In this regard, the state is seeking the return of approximately $30 million to $60 million (around 4.75 billion yen to 9.5 billion yen) in unjust profits gained through illegal event contracts, damages, and an immediate halt to all services within the state.

Governor's Strong Belief and the Reality of Gambling Threatening Users

Utah Governor Spencer Cox has also expressed full support for this legal action.

On his social media, the governor concluded that the essence of the services provided by Kalshi is merely "gambling." He emphasized the state's strict anti-gambling history since the implementation of statehood in 1896, reiterating that despite the changing times and transactions through smartphones, the state will not tolerate illegal activities.

The Attorney General also warned that prediction market companies like Kalshi do not provide users with investment opportunities or valuable insights but are designed to deprive users of their assets. Furthermore, the state has included in its claims measures to involve geolocation service providers to physically block access from within Utah to ensure the effectiveness of the injunction.

Legal experts suggest that Kalshi may seek to transfer the case to federal court to avoid immediate injunctions from the state court.

Conflict Between Federal and State Law: A Debate Over Jurisdiction Affecting the Nation

The main focus of this lawsuit is whether prediction markets receive protection under federal law as commodity transactions (swaps) supervised by the CFTC (U.S. Commodity Futures Trading Commission) or if they fall under "illegal gambling" regulated independently by each state.

Kalshi argues that it is a legitimate financial exchange under the jurisdiction of the CFTC and that individual states cannot exercise veto power. However, past injunction requests made by the company have been rejected by federal courts and appellate courts, removing legal barriers to Utah's civil lawsuit.

Such legal disputes are not limited to Utah; Arizona has already initiated criminal prosecutions, and more than ten states, including Massachusetts and New York, have taken similar legal actions.

Additionally, the NFL (National Football League) has submitted an amicus brief to the Supreme Court, and there is attention on whether the federal Supreme Court will hear the lawsuit from New Jersey. Concerns over election gambling have led to platforms being blocked in Taiwan, indicating that the regulatory wave surrounding prediction markets is expanding into legal issues on a national and global scale.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.