The state's attorney general is seeking an injunction, disgorgement of an estimated $30.6 million to $61.2 million in fees from Utah accounts and restitution. Kalshi says it is a federally regulated exchange; a federal judge ruled in August that it is subject to Utah's anti-gambling law.
The newest state lawsuit against a prediction market reaches past the platform to the firms that provide its liquidity.
Utah Attorney General Derek Brown sued Kalshi in the state's Third District Court on Tuesday, alleging that its contracts amount to illegal gambling under state law. The seven defendants are Kalshi Inc., KalshiEX LLC, Kalshi Klear Inc., Kalshi Klear LLC and Kalshi Trading LLC, along with Susquehanna International Group LLP and Susquehanna Government Products LLLP.
The state is seeking an injunction, disgorgement and restitution. It estimates that Kalshi earned $30,591,600 to $61,183,200 in fees from Utah accounts, and that Utah users lost about $5.5 million. The attorney general says Kalshi served more than 32,000 Utah users.
Why the defendants matter
Most legal fights over prediction markets so far have pitted states against the platforms. Naming Susquehanna, a major trading firm, extends the case to market makers whose quotes keep the contracts tradeable.
That raises a question for the business model. If liquidity providers face legal exposure in states that treat event contracts as gambling, they may quote less aggressively there, or not at all. Thinner books would raise trading costs for users and could weaken the price signals that make these markets useful.
The legal backdrop
Kalshi argues that it is a federally regulated designated contract market and that federal law governs its contracts. On Aug. 4, a federal judge in Utah ruled in KalshiEx LLC v. Cox, a suit Kalshi itself brought against the state, that the company is subject to Utah's anti-gambling law. Tuesday's suit moves the fight into state court.
The case also lands as Kalshi's role expands. The company is the listing exchange and clearinghouse for the crypto perpetual futures that the brokerage Webull plans to offer U.S. customers starting in November. The suit does not target those contracts. But two of the defendants, KalshiEX LLC and Kalshi Klear LLC, are the entities that would list and clear them, so the case adds legal risk to the infrastructure behind other firms' products.
Market implications
One reading is that the suit is a contained state fight. Kalshi operates under federal oversight, and the outcome in one state may not change its national business.
A second reading is that naming market makers changes the economics. Liquidity providers weigh legal risk against thin margins, and a precedent that exposes them could reduce depth across Kalshi's markets.
What to watch
Kalshi's response and any attempt to move the case to federal court; whether Susquehanna responds publicly; similar suits from other states that name market makers; liquidity on Kalshi's sports contracts; and Webull's November launch. A second state naming liquidity providers would turn a single case into a pattern.