Utah sues to halt Kalshi operations
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Utah is suing Kalshi for what state lawyers call a "brazen disregard for Utah's gambling laws," comparing the company to "the manager of a back-alley gambling den."
Why it matters: A judge could order Kalshi to suspend its operations in the state while the case is pending if the court grants the state's requested injunction.
Follow the money: The state estimates Kalshi has collected about $30 million-$60 million in fees from Utah users, and another $5.5 million in profits from wagers they lost.
- The lawsuit says Utah should get all of that money, plus punitive damages.
The other side: "As a national derivatives market … Kalshi answers to federal law, and no single state should have a veto over it," a Kalshi spokesperson wrote in a statement to Axios.
- "This latest state court action does not affect our ongoing federal litigation."
By the numbers: As of February, Kalshi reported 32,940 fully active accounts with Utah addresses.
What they're saying: "That represents 32,940 Utah residents who now have ready access to gambling and are potential problem gamblers," the lawsuit states.
The intrigue: February numbers cited by Kalshi in another lawsuit show Utah users accounted for a little over 1% of Kalshi's open wagers on that date.
- If that level of participation has been constant, state officials calculate that Utahns have placed more than 3 billion "illegal wagers" on the platform since it launched in 2021, each worth a $1 payout to the winner.
Catch up quick: The state's estimates come from filings in a lawsuit Kalshi filed earlier this year, arguing Utah couldn't enforce its anti-gambling rules against the platform because it's a financial exchange, subject only to federal regulators.
- A federal judge threw out that lawsuit in an August ruling that Kalshi says it will appeal.
Between the lines: Utah AG Derek Brown filed the lawsuit barely two weeks after a leader in the Church of Jesus Christ of Latter-day Saints defined prediction markets and online sports betting as sinful.