Utah Kalshi lawsuit expands to Susquehanna trading firms
Utah has escalated its dispute with prediction market operator Kalshi by bringing a state-court lawsuit that also names two trading firms associated with the platform. The case challenges whether contracts tied to sports and other real-world events can be offered to Utah residents under a business model the state considers illegal gambling.
The complaint, announced by Utah Attorney General Derek Brown on 20 October 2026, names Kalshi-related entities alongside Susquehanna International Group and Susquehanna Government Products. Utah is seeking restrictions on the contracts available to residents and financial remedies connected to the activity it alleges took place in the state.
The case adds a new dimension to a wider US regulatory dispute over prediction markets. At its centre is a fundamental question: should event contracts be treated as financial products under federal oversight, or as wagers that states can restrict under their gambling laws?
Utah Kalshi lawsuit widens the legal dispute
The Utah Kalshi lawsuit marks a change in direction from the earlier federal case, which Kalshi initiated against state officials. In the new action, Utah is pursuing its own claims and has included companies it says played roles in the platform's trading arrangements.
Brown's office argues that Kalshi's offerings cross the line into prohibited gambling. The state points to contracts linked to outcomes such as sporting events, arguing that the way customers participate resembles wagering rather than conventional financial-market activity.
Kalshi, by contrast, has presented its products as event contracts traded on a federally regulated exchange. That position rests in part on the company's argument that federal commodities law gives the Commodity Futures Trading Commission (CFTC) authority over its market and limits the ability of individual states to intervene.
The new complaint does not, by itself, settle that broader disagreement. It begins another stage of litigation in which Utah will have to establish its claims through the state-court process.
Why Susquehanna has become part of the case
The inclusion of Susquehanna's trading businesses brings attention to the market infrastructure supporting prediction markets, rather than focusing only on the company offering contracts to customers.
Market makers generally help markets function by providing liquidity and quoting prices at which participants can trade. Their involvement can make it easier for customers to enter or exit positions, although their precise responsibilities depend on the arrangements and activities at issue.
Utah's decision to name two Susquehanna firms means the court will be asked to consider the roles the defendants allegedly played in the challenged operations. The filing represents the state's claims, not a finding that either firm has violated the law.
The addition is significant because the legal debate over prediction markets increasingly concerns the relationships between platforms, trading participants and regulators. A court's assessment of each defendant's conduct will depend on the allegations, applicable law and evidence presented during the proceedings.
Neither the presence of a market maker nor a commercial relationship with a prediction market establishes wrongdoing on its own. The defendants' legal positions and any responses they file will be important to understanding how the case develops.
Utah seeks restrictions and financial remedies
Utah is asking the court to stop the defendants from offering specified event contracts to customers in the state. The requested restrictions cover sports and other categories of contracts that Utah considers inconsistent with its gambling prohibitions.
The state is also pursuing financial relief. Its complaint estimates that Kalshi collected between $30.6 million and $61.2 million in fees associated with Utah accounts. It separately estimates that residents lost about $5.5 million on individual wagers.
Those figures are estimates presented by the state, not amounts that a court has confirmed the defendants owe. The final financial position could depend on how the court evaluates the underlying calculations, the scope of any liability and the remedies available under the law.
Utah has also pointed to the number of residents with accounts on the platform. The state has said that nearly 33,000 verified accounts were associated with Utah as of February 2026. Account numbers alone do not establish that every account holder placed a particular type of contract or suffered a loss.
The case could therefore involve questions about how transactions are classified, how activity is attributed to Utah residents and what evidence is needed to calculate any recoverable amounts.
Earlier court ruling adds context
The latest lawsuit follows a separate legal challenge that Kalshi filed against Utah officials in February 2026. In that case, Kalshi argued that federal commodities law prevented Utah from applying its gambling restrictions to the company's event contracts.
On 4 August, US District Judge Robert Shelby ruled against Kalshi's position, concluding that the Commodity Exchange Act did not pre-empt Utah's enforcement of its anti-gambling laws in the dispute before him. The court granted summary judgment to the state and closed that federal case.
Kalshi subsequently sought emergency relief while appealing. In September, the US Court of Appeals for the Tenth Circuit declined to grant the requested injunction, leaving Utah without the federal-court restriction Kalshi had sought.
Those rulings form part of the legal background to the new case, but the state-court lawsuit is a separate proceeding with its own claims and requested remedies. The earlier decisions should not be read as a final judgment on every allegation against every defendant named in the new complaint.
A broader test for prediction market regulation
The dispute reflects a growing tension between federal oversight of derivatives markets and state authority over gambling. Prediction market operators argue that event contracts belong within the financial regulatory framework, while some state officials maintain that contracts resembling sports bets remain subject to local gambling restrictions.
The outcome could matter beyond Utah if courts are asked to assess similar products and business relationships elsewhere. However, the effect of any ruling will depend on the legal questions decided and the specific facts established in the case.
For now, the lawsuit places Kalshi and the two Susquehanna firms in a new legal contest over the operation of event-contract markets in a state with a longstanding prohibition on gambling. The next developments will depend on the defendants' responses, the evidence submitted and the court's treatment of Utah's claims.
Until those issues are resolved, the state's financial estimates and allegations should be distinguished from proven liability. The case is another important step in the US debate over where prediction markets fit within the country's divided system of financial and gambling regulation.
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