News: Kalshi Sues Utah In Federal Court
Prediction market seeks to stop Gov. Spencer Cox from enforcement action before it happens. Roundup: Bill to ban sports event contracts drops in Congress; Kalshi abandons affiliate badges on Twitter.
Kalshi sued Utah Gov. Spencer Cox and other state officials in federal court, as it tries to maintain clarity that it can offer prediction markets in the state.
Kalshi is seeking injunctive and declaratory relief via a complaint filed in US District Court for the District of Utah on Monday.
A number of Utah officials have been speaking out against prediction markets, as we have had Cox, the state’s attorney general and now a US senator talking about reining in sports event contracts:
More from me on Utah’s increasingly aggressive stance at The Closing Line:
Kalshi’s complaint references what it believes will be imminent enforcement action from the state:
This action challenges the State of Utah’s intrusion into the federal government’s exclusive authority to regulate derivatives trading on exchanges overseen by the Commodity Futures Trading Commission (“CFTC”). 7 U.S.C. § 2(a)(1)(A). Plaintiff KalshiEX LLC (“Kalshi” or “Plaintiff”) believes the Governor of Utah (the “Governor”) and the Attorney General’s Office of Utah (the “Utah AG”) 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. Defendants have repeatedly represented that they believe Kalshi is operating unlawfully under Utah anti-gambling laws—just last week the Governor said “I think you’re going to see 50 states suing these guys in one way or another” and that businesses like Kalshi are “illegal in Utah and will continue to be so.” Yesterday, Attorney General Brown published an op-ed, which referenced Kalshi by name, made clear that Attorney General Brown considers trading event contracts to be illegal in Utah, and stated he has a plan to address prediction markets operating in the state. And when Kalshi’s counsel made multiple attempts to contact the Utah AG to inquire as to whether Utah was preparing to take action against Kalshi, it was met with silence, even though the Utah AG had previously been willing to communicate with counsel.
Utah’s stated intent to prohibit Kalshi from operating is a form of regulation that intrudes upon the federal regulatory framework that Congress established for regulating derivatives on designated exchanges. The state’s efforts to regulate Kalshi are preempted under principles of express preemption, field preemption, and conflict preemption. This Court should therefore issue both a preliminary and a permanent injunction, as well as grant declaratory relief.
You can see the complaint here:
Two exhibits were offered alongside the complaint, consisting of tweets from Cox:
A variety of states have issued cease-and-desist letters to prediction markets over the past year. Kalshi (and other prediction markets) have sued state officials in some of those states to stop potential enforcement. Kalshi had never sued a state before receiving a cease-and-desist.
The state legislature is also advancing a bill that would try to prohibit prediction markets. However, it’s not clear what a state-level ban would accomplish while lawsuits continue in court about whether federal law preempts state law when it comes to event contracts. More from the Utah News Dispatch:
The Senate Business and Labor Committee unanimously approved a bill Thursday to ban proposition betting — which involves wagering on specific events like an athlete’s performance rather than the game’s outcome — as legislators aim to clarify what they describe as a growing legal gray area.
HB243 is sponsored by Rep. Joseph Elison, R-Toquerville, and defines proposition betting as a “gambling bet on an individual action, statistic, occurrence, or non-occurrence.” After passing through the Utah House, the bill is headed to the Senate.
“It’s a huge gray area and there’s lots of lawsuits all over the country right now … debating this very thing, trying to find out what are the actual definitions,” Elison told Utah News Dispatch. “They’re flying under what’s called prediction markets, and prediction markets are regulated by the Federal Commodities Exchange. That’s why they’re able to do it.”
I am helping Next.io with its new Emerging Verticals event on March 9 in New York City, ahead of the main conference. I’ll be there and speaking! You can get tickets and learn more here. Use code F0EVTCL0L10 for a 10% discount. Reach out if you have any questions about the event or getting tickets.
Prediction markets roundup
Fair Markets and Sports Integrity Act introduced (bill in Congress from Rep. Dina Titus): “To amend the Commodity Exchange Act to prohibit entities registered under such Act from engaging in transactions involving sporting event or casino-style gaming contracts.”
How Polymarket and Kalshi are gamifying truth (Bloomberg): “Mention markets are the high-octane, fast-twitch speed competitions of the prediction market world. But they’re just one corner of it. Users of Kalshi and its primary rival, Polymarket, can bet on events major and minor, from politics to sports to culture to the weather. Recent markets on Kalshi have included whether certain words would be used during a Palantir Technologies Inc. earnings call, whether Elon Musk would win his court case against OpenAI and whether the highest temperature in Seattle on Feb. 4 would be within a certain range. Polymarket users have bet on whether the US would strike Iran on a particular date, whether a given Trump cabinet member would be the first to leave office and whether Jesus Christ would return before 2027. …”
“I don’t know how you can be over here saying, ‘We’re the greatest source of truth mankind has ever known,’ and then your social media team is just lying,” says Dustin Gouker, author of prediction markets newsletter Event Horizon. “Apparently they think engagement outweighs trust.”
Days after $5M donation, Trump administration backs Crypto.com in lawsuit (Popular Information): “In a document quietly filed with the Federal Election Commission on Friday night, MAGA Inc., the primary Super PAC supporting President Trump, revealed that it received a $5 million donation from Crypto.com on January 23, 2026. The donation was made in the name of Crypto.com’s parent company, Foris Dax, Inc. 25 days later, on February 17, the Trump administration’s Commodities Futures Trading Commission (CFTC), intervened on Crypto.com’s behalf in high-stakes lawsuit in federal court. …”
Winklevoss’ Gemini Risks a Hard Landing After the Crypto Rout (Bloomberg): “Cameron and Tyler Winklevoss spent more than a decade building Gemini Space Station Inc. into one of crypto’s longest-running exchanges, among the first to secure major US regulatory approvals and a survivor of the industry’s repeated cycles of scandal and collapse. Now, after a more than 40% plunge in Bitcoin erased the bull market that helped underpin the money-losing company’s growth plans, Gemini is testing just how fast it can reposition — with little margin for error….”
“Mizuho, which maintains an outperform rating, framed the layoffs and international exits as necessary surgery that should speed up reaching profitability. The firm pointed to Gemini’s custody business and its prediction markets platform as defensible positions to work from.”
Kalshi Abandons Affiliate Badges After Twitter’s Policy Shift (Front Office Sports): “Prediction market Kalshi removed all affiliate badges on X/Twitter on Monday evening after the social media platform recently updated its paid partnerships policy to prohibit promotional deals with accounts that post gambling and sports betting content. Twitter updated its paid partnerships policy last week to bar paid affiliate accounts that post about “gambling products and services (including lotteries, social casinos, sports betting, and other gambling related content).”
A Kalshi spokesperson confirmed the move to Front Office Sports, saying, “We’ve decided to remove Kalshi badges. People loved the badges and it was a fun way to engage the community, but it became too difficult to police, and people often confused badged accounts with Kalshi-endorsed messages. We’ll figure out other ways to make things fun for our traders.”
As noted by FOS and from what I can see on Monday night, Polymarket accounts still had affiliate badges.
Editorial | If feds won’t regulate prediction markets, states must try (Boston Globe, paywall): “The rise of prediction markets in the United States has been staggering. In December alone, users traded nearly $12 billion on Kalshi and Polymarket, the two biggest platforms in the business. That’s a 400 percent increase from just one year earlier. And by the end of the decade, some analysts say, prediction markets’ annual trading volume could hit a trillion dollars. Those numbers should rattle regulators and lawmakers, who have so far allowed prediction markets to circumvent a lot of rules and regulations that protect consumers. While strong federal regulation would be ideal, in its absence states will need to do whatever they can.”
Kalshi Clears ‘Backlog’ of Suspicious Activity, Plans to Disclose Actions Against Insider Trading (Decrypt): “When Robert DeNault joined Kalshi’s four-person legal team in October, it was under the assumption that his background investigating white collar crimes could come in handy. Now serving as the prediction market’s head of enforcement, the former associate at law firm White & Case told Decrypt that Kalshi is preparing to disclose a wave of disciplinary actions that have been taken against users—the result of a monthslong effort to clean up a ‘backlog’ of potential trading violations.”
“It’s taken a big chunk of my first few months here to get through these,” he said. “We’re going to continue to post these, [...] but you’ll see it start in the coming weeks.”
Kalshi’s Tarek Mansour on Prediction Markets, Regulation, and the Future of Truth in Finance (Yahoo Sports/Boardroom): “When Kalshi founder and CEO Tarek Mansour first started thinking about prediction markets, he wasn’t trying to disrupt sports betting. He was trying to solve a problem he witnessed firsthand on Wall Street.
“Speaking with Rich Kleiman on the LionTree Podcast in partnership with Boardroom Talks, Mansour traced the origins of Kalshi back to 2016, when he was working at Goldman Sachs during Brexit and Donald Trump’s first presidential run. Institutional investors were scrambling to position themselves around uncertain political outcomes. The trades were complex, indirect, and often wrong. ‘We could build something better,’ Mansour recalled thinking, a simple, transparent market where people could trade directly on the probability of future events.”
Kalshi + o1.exchange:
o1.exchange@o1_exchangeBREAKING: Onchain everything exchange does it again. @Kalshi Predictions, now live on @o1_exchange.6:33 PM · Feb 23, 2026 · 7.6K Views11 Replies · 9 Reposts · 65 LikesThe Polymarket of the day: Thanks to the Substack integration.
