SALT LAKE CITY — The State of Utah has filed a lawsuit against Kalshi, claiming the prediction market company is actually illegal gambling in which residents have lost millions.
Utah Attorney General Derek Brown announced the filing during a briefing Tuesday.
In the lawsuit, Utah claims that prediction event contracts offered by Kalshi are "indistinguishable" from sportsbook bets offered by online gambling companies. It alleges Kalshi "took in billions of dollars in bets," focused mainly on sports.
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The state shared data from Kalshi showing nearly 33,000 Utahns had verified accounts with the company as of February, and that residents had lost between $36 million and $66 million through transaction fees and betting losses.
“In fact, they sued Utah over this very issue and recently a federal court rejected their argument that Utah doesn't apply to them, and after that decision by the federal court, the bets kept on coming," said Brown. "In fact, in that case, Kalshi’s own sworn filings made it clear that more than 32,000 Utahns have verified Kalshi accounts."
Over the summer, Brown hinted at a possible lawsuit after a federal judge ruled the state could block prediction market companies from operating in Utah due to the state's constitutional prohibition against gambling.
The new lawsuit accused Kalshi of advertising its betting activity as being legal in all 50 U.S. States despite Utah's ban.
“And the complaint alleges, that was just filed, that Kalshi collects a fee on every bet and the other side of that bet is held by those trading firms and they collect when Utahns lose. The harm isn’t abstract, and the harm frankly isn't new either," added Brown.
In a statement shared with FOX 13 News, Kalshi said it would continue to fight against Utah's efforts to keep it from operating in the state.
"Kalshi is a federally regulated financial exchange, like the stock market. Our customers trade with each other and set the prices. As a national derivatives market overseen by the CFTC, Kalshi answers to federal law, and no single state should have a veto over it," the company said. "This latest state court action does not affect our ongoing federal litigation."