Susquehanna named as defendant in Utah civil suit against Kalshi

Derek Brown, Utah's attorney general, filed a civil complaint on October 20 at the state's Third District Court that does something no previous state enforcement action has done: it names Susquehanna's trading affiliates as co-defendants alongside Kalshi itself.

The filing seeks between $30.6 million and $61.2 million in restitution, calculated from what the state estimates as more than $3 billion in total wagers placed by over 32,000 verified Utah accounts. Brown has indicated the figures may rise as discovery produces fuller transaction records. He has also described this action as part of a larger investigation, without specifying where it extends.

The Susquehanna inclusion is the structural detail that matters most here. Kalshi's liquidity arrangement with Susquehanna deepened in August when the firm began supplying pricing for a block trading arrangement involving Cantor Fitzgerald. Utah is now arguing, implicitly, that providing liquidity to an allegedly unlawful exchange is itself unlawful conduct. If that theory holds in state court, the exposure calculus for every institutional market-maker operating on federally regulated prediction platforms changes materially. Liquidity provision has been treated as a function distinct from platform operation. Utah is contesting that distinction.

Kalshi's response is the same it has given Ohio, New Jersey, and Missouri: the Commodity Exchange Act governs its operations, the CFTC is its regulator, and no single state holds veto power over a nationally designated derivatives market. That argument is legally coherent. It is also losing in Utah's federal courts. In August, US District Judge Robert Shelby granted summary judgment to the state after finding Kalshi's preemption argument unconvincing. The Tenth Circuit appeal is pending, but no ruling has come.

What Kalshi is managing, then, is a two-track problem. The federal preemption case is the one it wants to win, and the one it believes is correctly framed. The state civil suit is the one it has to survive in the meantime, and Brown has now handed it a more complicated adversarial posture by adding parties whose continued participation in the market is operationally significant.

The consensus framing treats this as another iteration of the same state-versus-federal jurisdiction dispute. I think that misses where the pressure actually builds. Kalshi can absorb a state court injunction while the Tenth Circuit deliberates. What it cannot easily absorb is institutional counterparties beginning to price state liability risk into their participation decisions. Susquehanna has the legal resources to contest Brown's theory vigorously. But the question being put to every other market-maker watching this case is whether the upside of providing liquidity on contested event contracts justifies the exposure of being named in the next complaint. Brown, whether by design or instinct, has found the load-bearing joint.

Utah's constitution has prohibited gambling since statehood in 1896, and the state permits no lottery, no casino, no sportsbook. That is not a position adopted in response to prediction markets — it predates them by more than a century. Brown's line about cellphones is rhetoric, but it is rhetoric with a durable legal foundation beneath it. The state is not improvising a theory; it is applying an existing prohibition to a new delivery mechanism.