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Utah authorities have filed a lawsuit seeking to stop Kalshi from operating in the state and recover millions of dollars for residents, according to an Oct. 21 report by the New York Post. The action challenges whether the prediction market company’s event contracts are gambling subject to state law or federally regulated financial activity.
Kalshi co-founder Tarek Mansour said the regulatory fight could ultimately reach the US Supreme Court. The report does not identify a scheduled Supreme Court proceeding.
Utah alleges Kalshi operates an unlawful gambling business
Utah Attorney General Derek Brown accused Kalshi of being the “manager of a back-alley gambling den” in a state where gambling is illegal. The lawsuit alleges a “brazen pattern of unlawful conduct.”
According to the report, Utah alleges that Kalshi knows the state prohibits gambling but continues to operate as a gambling provider. The state describes the platform as a closed-loop wagering system in which Kalshi creates games, handles bets and pays winnings. It also alleges that the company acts as a market maker and takes a fee from each wager.
Kalshi offers contracts tied to real-world outcomes, including sports, the Oscars, weather conditions in France and pricing at Costco.
The lawsuit seeks to force Kalshi to relinquish money earned from its Utah operations so it can be returned to residents. It does not target the estimated 32,000 Utah residents with verified Kalshi accounts.
Kalshi argues federal law takes precedence
Kalshi describes itself as a federally regulated financial exchange similar to the stock market. The company says it complies with federal law and that individual states should not be able to override that authority.
Mansour expressed confidence in the company’s position during a podcast appearance, according to the report.
The dispute extends beyond Utah. New York and Nevada have also pursued legal action against prediction market companies. The Post additionally reported that a recent US appeals court ruling allowed Ohio and Tennessee to regulate Kalshi’s event contracts under their gambling laws.
More from playca.com – Federal judge allows Utah to enforce anti-gambling laws against Kalshi – Utah dispute puts prediction markets under fresh scrutiny as Kalshi challenges state law – California Column Examines Kalshi and the Divide Over Betting Regulation
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Source: As reported by New York Post.
