Utah has filed a lawsuit against prediction market operator Kalshi and firms tied to Susquehanna, alleging illegal betting and seeking to shut down the operations. The state is asking for injunctions, restitution, and disgorgement of profits, according to the complaint. At the center of the case is a claim that market makers kept wagering going even after Kalshi lost a federal court fight.
The federal court loss and what followed
Kalshi, which runs event contracts that let users bet on outcomes like elections and economic data, had already been dealt a setback in federal court. Utah's lawsuit now points to that defeat and argues that the platform's partners didn't stop. The state alleges that market makers — the firms that provide liquidity and keep trades moving — helped sustain betting activity despite the court outcome. The complaint names Susquehanna firms as defendants alongside Kalshi.
The legal theory hinges on whether those market makers can be held responsible for facilitating what Utah characterizes as illegal wagering. By targeting the firms that supply liquidity, the state is widening its attack beyond the platform itself. That approach could complicate how prediction markets operate in states that consider their contracts to be gambling.
What Utah wants from the court
The remedies Utah is seeking are straightforward: injunctions to halt the alleged illegal betting, restitution for those who lost money, and the surrender of profits the defendants earned. The lawsuit doesn't specify dollar amounts in the facts provided. But the combination of injunctive relief and financial penalties signals that the state wants to do more than send a warning.
Injunctions would force Kalshi and the Susquehanna-linked firms to stop offering or supporting the contested contracts in Utah. Restitution would aim to return money to users, while profit disgorgement would strip the companies of gains from the activity. The case is now in the hands of the Utah court system, though no hearing date has been set.
The market-maker angle
Market makers are the invisible plumbing of any trading venue. They quote prices on both sides of a contract so users can buy and sell without waiting for a counterparty. In prediction markets, that role is especially important because liquidity can be thin. Utah's claim that these firms helped sustain wagering after Kalshi's federal court defeat puts a spotlight on that plumbing.
The lawsuit doesn't detail exactly what the Susquehanna firms are alleged to have done. But by naming them, Utah is testing whether liquidity providers can be pulled into state-level gambling enforcement. If the case proceeds, it could set a precedent for how other states treat market makers in the prediction market space.
Kalshi's federal setback
Kalshi has been fighting legal battles on multiple fronts. The federal court defeat referenced in Utah's complaint is one of them. The facts provided don't specify which court or what the ruling said, but the state is using that loss as context for its own action. The implication is that Kalshi's legal troubles are mounting, not receding.
The company has argued that its contracts are regulated financial products, not gambling. That argument won it a federal license to operate. But states like Utah see things differently, and they're willing to go to court to prove it. The lawsuit is the latest sign that the battle over prediction markets is being fought state by state.
What happens next
The case will proceed in Utah's courts, with the state seeking a preliminary injunction to stop the alleged betting while the lawsuit moves forward. Kalshi and the Susquehanna firms will have a chance to respond. No trial date has been scheduled. For now, the immediate question is whether the court will grant an injunction that would bar the defendants from operating in Utah while the case plays out.
