Utah authorities are seeking to kick Kalshi out of the state, the latest legal battle to hit the prediction market giant as its co-founder Tarek Mansour says efforts to regulate his business could end up in the Supreme Court.
Kalshi is “the manager of a back-alley gambling den” in a state where gambling is illegal, Utah’s Attorney General Derek Brown alleged in state court Tuesday, saying the company has shown a “brazen pattern of unlawful conduct.”
The suit is demanding that Kalshi – which offers wagers across a slew of real-world events from sports and the Oscars to the weather in France and prices at Costco – cough up millions it made on Utah turf, so the money can go back to residents.
Utah is the latest state to target Kalshi and other prediction markets, which claim their event contracts – which allow users to take a “yes” or “no” position – are financial “swaps” sanctioned by the Commodities Futures Trading Commission. Kalshi has argued that federal approval overrides state bans.
States including New York and Nevada – along with US Native American tribes – have also sued prediction market companies, seeking to prevent them from offering wagers in their jurisdictions.
A US appeals court ruled last month that Ohio and Tennessee can regulate Kalshi’s so-called event contracts under gambling laws, dealing the prediction markets a significant setback.
“Kalshi is a federally regulated financial exchange, like the stock market. Our customers trade with each other and set the prices,” a Kalshi spokeswoman told The Post.
“As a national derivatives market overseen by the CFTC, Kalshi answers to federal law, and no single state should have a veto over it. This latest state court action does not affect our ongoing federal litigation.”
After Kalshi landed an appeals court win in the Jersey case, the state asked for a Supreme Court review.
Speaking on the Reuters Econ World podcast on Wednesday, Mansour said he was confident of the outcome, though he declined to place odds on it.
“Frankly, the statute and the structure is very, very clear and, you know, whether people think a sports game is a game, this commodities exchange act gave the CFTC the authority to decide what to do with the game, and to regulate it the way it sees fit, and that’s what it’s doing,” he told Reuters.
Despite the mounting legal hurdles, investors have continued to pour capital into Kalshi – the company has raised $2.6 billion total and has reportedly been in talks for additional financing that could value it at $40 billion.
Investors have said they remain optimistic that the company can defeat at least some of the suits and that its bet-on-anything business is a winning concept even if regulators parse it back.
Other venture capitalists have said the Trump administration’s support of prediction markets could mean that by the time a new administration comes in, Kalshi may be so integrated into financial markets – and everyday life for many Americans – that unwinding it would be deeply unpopular.
Utah’s suit names four of Kalshi’s subsidiaries and two Pennsylvania-based trading companies that provide pricing and liquidity for the platform.
Brown, the Utah AG, emphasized that the suit isn’t targeting the more than 32,000 Utahns who have verified Kalshi accounts.
Kalshi is “well aware” of Utah’s ban on gambling, the suit alleges, but still operates as a gambling provider because it acts as the market maker on its platform, facilitates bets and keeps a portion of each wager as its own payment.
“It is administering a closed-loop wagering system,” the complaint states, “where it creates the games, handles the bets, and pays out the winners.”
It adds that Kalshi at first only offered “wagers tied to traditional financial instruments.” But as early as 2024 – around the time it and other prediction markets burst into the mainstream following that year’s elections – Kalshi began offering sports trading and adopted language specifically referring to wagers on professional football and other sports.
That torpedoed any distinction between what Kalshi does and gambling, Utah argues.
Sports betting is key for Kalshi, accounting for as much as 70% of an estimated $4 billion in revenue during the 12 months ended this July, according to a source close to the company.