Utah Gov. Spencer Cox recently told a reporter that prediction market apps like Kalshi are “illegal in Utah.” Then Utah Attorney General Derek Brown attacked Kalshi’s stance that its “trading on futures” isn’t gambling.
“I was recently asked whether I plan to do anything” about the rise of such apps, Brown wrote. “My response? You can bet on it.”
And if that wasn’t enough for Kalshi to predict a battle with Utah, it says it repeatedly reached out to ask if the state was about to sue it — but Brown’s office ghosted the company.
So Kalshi has gone to court first, asking a federal judge to tell the state — through an injunction — that it has no control over its business in Utah.
In a complaint filed Monday in U.S. District Court, Kalshi said it expects Utah leaders to take action against the company, which Cox “incorrectly views as ‘illegal in Utah.’”
Kalshi pointed out it won a similar injunction last week in Tennessee and one last year in New Jersey, after judges found that only the federal Commodity Futures Trading Commission can regulate the “sports event contracts” it offers.
[Read more: Utah Gov. Spencer Cox says sports betting on Kalshi is ‘destroying lives.’ The data is on his side.]
Cox and Brown have both been critical of prediction markets such as Kalshi and Polymarket, which allow people to bet against one another on the outcome of future events — from politics to sports to the weather.
“I think you’re going to see 50 states suing these guys in one way or another,” Cox recently told Bloomberg Government.
Kalshi argues those remarks are more than political rhetoric and infringe on its rights to operate freely in Utah.
The Utah Attorney General’s Office declined to comment on the suit.
The lawsuit is the first legal action in a war of words between Utah officials and Kalshi.
Last week, Commodity Futures Trading Commission Chairman Mike Selig asserted that his organization had full jurisdiction over prediction markets — like Kalshi — in the United States. In an op-ed published in the Wall Street Journal, Selig argued that prediction markets allowed participants to speculate on “future market conditions without owning the underlying asset.”
“In the wake of the 2008 financial crisis, Congress expressly granted the CFTC comprehensive authority over any such contract based on a commodity,” Selig, a Trump appointee, wrote.
“The statutory definition of ‘commodity’ is extraordinarily broad,” he wrote, “and includes practically all goods, articles, services, rights and interests except for onions (due to a history of market manipulation) and movie box-office receipts (because of Hollywood lobbying).”
Cox then ridiculed Selig’s argument on social media.
“Mike, I appreciate you attempting this with a straight face, but I don’t remember the CFTC having authority over the ‘derivative market’ of LeBron James rebounds,” he wrote on X. “These prediction markets you are breathlessly defending are gambling—pure and simple. They are destroying the lives of families and countless Americans, especially young men. They have no place in Utah."
Cox said he’d “use every resource within my disposal as governor” to beat Selig in court.
The lawsuit also points to an op-ed published Sunday in the Deseret News, where Brown explained why he joined Connecticut’s attorney general, Democrat William Tong, in “urging Congress to address offshore gambling operations that disregard state law and target young Americans.”
Monday’s lawsuit said the company expects Cox and Brown “will imminently bring an enforcement action against Kalshi with the intent to prevent Kalshi from offering event contracts for trading on its federally regulated exchange.”
Kalshi says it has made “good-faith efforts to engage Utah in dialogue,” but Brown didn’t respond to recent requests for a conversation from the company’s lawyers.
“The lack of response, combined with the clear threat included in the Governor’s multiple public statements, has led Kalshi to believe that an enforcement action in Utah is imminent,” the complaint states.
Meanwhile, Utah lawmakers are advancing HB243 that would tighten the state’s gambling law by defining proposition betting as a wager on “an individual action, statistic, occurrence or non-occurrence.” The House passed the bill earlier this month and it now heads to the Senate for further consideration.
Kalshi’s filing in Utah isn’t the only one of its type in the U.S. Currently, battles over whether states can regulate how prediction markets operate are underway in the U.S. Courts of Appeals’ Third, Fourth, and Ninth circuits.
Courts in Nevada and New Jersey have agreed with Kalshi that only the federal commission controls it, while Maryland’s federal court decided that the state has power to regulate gambling occurring on Kalshi’s site.