Utah has sued Kalshi and two firms associated with Susquehanna International Group, expanding its campaign against prediction-market contracts from the exchange operator to the professional trading firms that help supply liquidity. State officials estimate that Kalshi collected between $30.6 million and $61.2 million in fees attributable to Utah accounts, although that is a calculation made in the complaint, not verified revenue or a court-ordered penalty.
The October 20 action names five Kalshi companies together with Susquehanna International Group and Susquehanna Government Products. Utah alleges that sports and other event contracts amount to unlawful gambling under state law and seeks to stop specified markets being offered to its residents, recover allegedly improper profits and obtain monetary relief.
The inclusion of market makers is the distinctive escalation. Kalshi argues that its federally regulated derivatives exchange is governed by the Commodity Futures Trading Commission, while Utah contends that federal registration does not exempt what it views as bets from a state constitutional prohibition on gambling. The new case adds potential exposure for firms taking the other side of trades, without establishing that they violated any law.
Why Did Utah Sue Susquehanna Alongside Kalshi?
Utah’s October 20 complaint, made publicly available by Utah News Dispatch, identifies Kalshi Inc., KalshiEX LLC, Kalshi Klear Inc., Kalshi Klear LLC and Kalshi Trading LLC as defendants. It also names Susquehanna International Group LLP and Susquehanna Government Products LLLP, along with unidentified defendants.
The state does not merely accuse the exchange of hosting wagers. It alleges that Kalshi Trading and the Susquehanna defendants participate as counterparties to customer positions and therefore play a role analogous to a betting operator accepting wagers. That is Utah’s legal characterization, not an established determination of how the firms must be regulated.
Market makers generally post prices at which they are willing to buy and sell financial contracts. Their economic purpose is to provide counterparties and executable liquidity to other market participants. Depending on the market structure, they may earn trading spreads or receive incentives for maintaining quotes, while taking inventory and price risk.
They do not automatically profit on every losing retail position, nor does serving as a counterparty by itself prove an illegal gambling business. Utah’s theory depends on whether the contracts and the alleged activities of each defendant meet the relevant state-law requirements.
Sports and gambling lawyer Daniel Wallach characterized this as the first state attorney-general enforcement action aimed at prediction-market market makers. That assessment highlights a potentially important shift in enforcement strategy, but is a characterization by a legal observer rather than a ruling in the case.
The issue is distinct from ordinary concerns about trading concentration. In a previous analysis of repeated Kalshi crypto-perpetual trades, the exchange attributed unusually similar trade sizes to one liquidity provider. The Utah complaint instead challenges whether participating in certain event contracts is lawful at all.
Where Does the $30.6 Million to $61.2 Million Estimate Come From?
Utah says more than 32,000 verified accounts with Utah addresses were eligible to trade on Kalshi earlier in 2026. The complaint also uses an estimate that Utah represented approximately 1.1% of the exchange’s open interest at a prior point in time, and extrapolates that share across Kalshi’s cumulative trading activity.
On that basis, the state estimates more than 3.059 billion contracts or wagers attributable to Utah accounts by October 19. Applying an assumed fee of roughly one to two cents per contract produces around $30.6 million to $61.2 million in potential fees.
That calculation is not equivalent to an audited breakdown of transactions originating from Utah. It extends a share measured at one point across activity in other periods and uses simplifying assumptions about charges. The state itself acknowledges that the actual sum could prove higher or lower once it obtains further evidence.
The dollar range should also not be presented as a definite damages award, a fine already imposed or the amount the Susquehanna firms earned. It is Utah’s estimate of fee revenue associated with the alleged in-state activity, offered in support of possible restitution or disgorgement after litigation.
Utah has additionally alleged separate losses experienced by residents. But fees earned by a platform, amounts users placed at risk, net trading losses and profits taken by market makers are different financial measures. Adding them together without checking for overlap could materially distort the alleged harm.
For investors, the more meaningful issue is that state enforcement can attack both a trading venue’s fee economics and the legal certainty of the liquidity-provision relationships that support its markets.
Which Prediction Markets Does Utah Want Blocked?
Utah seeks restrictions extending beyond conventional sports outcomes. The complaint targets event contracts connected to sports, elections, politics, culture and so-called mentions markets, which allow customers to trade on whether a particular person will say specified words during an event.
The requested remedy includes a prohibition on offering those categories to people in Utah and the use of accurate, court-approved location-verification measures. Geolocation would matter because a user’s stated address, physical location, device and internet connection do not always point to the same jurisdiction.
The state also wants the defendants to return allegedly unlawful gains, compensate affected parties and pay other damages the court considers appropriate. These remedies are requested, not ordered. There has been no established ruling in this new lawsuit that directs the firms to pay $61.2 million or immediately terminate every identified market.
Utah’s Constitution prohibits the legislature from authorizing gambling, an unusually strict backdrop to the dispute. State Attorney General Derek Brown has argued that describing an outcome-based wager as an event contract does not change its essential character.
Kalshi disputes that characterization. The company’s longstanding position is that qualifying event contracts are federally regulated financial derivatives traded on a registered designated contract market, and that state-by-state regulation would conflict with the Commodity Exchange Act’s federal framework.
What Did Utah’s Earlier Federal Court Victory Establish?
The October 20 action is separate from litigation Kalshi initiated against Utah officials in February. The company sought to establish that federal commodities law displaced the state’s ability to enforce its gambling restrictions against the relevant contracts.
On August 4, a federal district court ruled for Utah. The Utah Attorney General’s official explanation of that judgment says the court rejected Kalshi’s federal-preemption argument in that action. Kalshi appealed, and the Tenth Circuit declined in September to halt enforcement while the appeal proceeds.
Those decisions strengthened Utah’s position, but the appeal has not been described as a final ruling on every question now raised in the new state-court complaint. In particular, the new claims against the additional Susquehanna defendants must be addressed on their own procedural and factual record.
Elsewhere, courts have reached differing conclusions about the degree of federal protection available to sports event contracts. DaveFinances covered Kalshi’s separate Nevada appellate setback, highlighting how interpretations of the Commodity Exchange Act can change the availability of similar products across state lines.
The CFTC has argued in some proceedings for broad federal authority over derivatives traded on registered exchanges. States respond that Congress did not eliminate traditional gambling enforcement merely by allowing derivatives markets to operate under federal supervision. Neither position should be presented as having definitively resolved every outstanding lawsuit.
Could Targeting Market Makers Change Kalshi’s Business Model?
If a state eventually obtained an enforceable order affecting counterparties as well as the venue, financial firms supporting the order books could have to reassess where they quote contracts, how they identify counterparties and what contracts they are willing to support. That could influence spreads and available depth even before a platform faces a full shutdown in a particular jurisdiction.
For a nationwide prediction exchange, the commercial challenge is fragmentation. Restricting specific states or contract categories may reduce eligible demand while creating new costs for location controls, surveillance, legal support and relationships with liquidity providers.
But the scale of any such effect is currently speculative. The complaint supplies no verified estimate of how much Kalshi’s liquidity comes from the named Susquehanna firms, how much fee revenue was actually earned in Utah, or how the platform would respond to the precise injunction requested.
There is also a countervailing market-integrity concern: regulators want customers protected from activity they consider illegal betting, while derivatives venues argue that professional liquidity and consistent nationwide access are central to orderly trading. The legal classification of the contracts is therefore consequential for users and financial intermediaries alike.
Prior litigation has already raised practical questions about managing open trades when state restrictions conflict with national exchange rules. An earlier Michigan dispute involving Kalshi and the CFTC showed why cancellation or unwinding of existing positions can become contentious even after authorities agree that access should change.
What Happens Next in the Utah Case?
The lawsuit was filed in Utah’s Third Judicial District Court on October 20. The next milestones are service of process, the defendants’ legal responses, any request for emergency relief, and a court determination of whether it has authority to issue the injunction and monetary remedies Utah seeks.
Discovery could also replace the state’s transaction estimates with more precise records: actual contract counts by user location, fee receipts, distributions to affiliates, the roles of specific market makers and the compliance checks applied to customers claiming to reside outside Utah.
Kalshi has maintained that the new state action does not alter its ongoing federal appeal. As of the initial reporting, no ruling awarding Utah damages or establishing misconduct by the named Susquehanna firms had been identified.
The larger development is the state’s attempt to pursue both the exchange that lists event contracts and major counterparties that help those contracts trade. For investors in prediction-market infrastructure, that broadening of legal targets may ultimately matter more than the headline fee estimate, which remains contested and unverified.
Johan Shamshad is a financial markets writer at Dave Finances covering cryptocurrencies, trading platforms, brokers, fintech, financial regulation, and developments across global markets. He previously worked at Gulf News, adding newsroom experience to his coverage of fast-moving financial and digital-asset markets.
His work focuses on identifying market-moving events, company developments, regulatory changes, product launches, and shifts in trading and financial infrastructure.
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