10th Circuit denial leaves Kalshi without a shield in Utah court

Derek Brown stood at a podium in Salt Lake City on Tuesday and said something that sounded like history rather than litigation: "Utah has said no to gambling since statehood in 1896, and that didn't change when betting moved onto cellphones." The line was good. It was also a legal argument dressed as a civics lesson, and the distinction matters for anyone trying to read where this case actually lands.

The complaint Brown filed names Kalshi, several affiliates, Susquehanna International Group, and Susquehanna Government Products as defendants. It seeks between $30.6 million and $61.2 million in fees allegedly collected from Utah customers — more than 32,000 of whom had verified accounts on the platform as of February. The state wants geolocation controls, an end to event contract offerings for Utah residents, and disgorgement of profits.

Kalshi's position is the one it has pressed everywhere: the CFTC has exclusive jurisdiction over its contracts as federally regulated derivatives, and no single state should hold veto power. That argument won in the Third Circuit, in the New Jersey dispute. It lost in the Sixth Circuit, which covers Ohio and Tennessee. A federal judge in Utah rejected the preemption claim outright in August, and the 10th Circuit subsequently declined to issue an injunction while Kalshi appeals. That sequence is what makes the Utah state court filing different from the fights in other jurisdictions.

When an appellate court refuses to pause enforcement pending appeal, it is not ruling on the merits — but it is making a probability judgment. The 10th Circuit looked at Kalshi's arguments and decided they were not strong enough to warrant protection while the case continued. That is a meaningful data point, and the consensus reading has treated it as one. My own check against contrarianism here confirms the consensus is correct on the legal mechanics. Where it may be underweighting something is on the Susquehanna inclusion.

Market-maker liability is structurally different from operator liability. Susquehanna did not set the terms of Kalshi's contracts or decide which states to serve. The theory required to hold a market-maker jointly liable for the operator's jurisdictional choices is one that, if it holds, would propagate through every similar arrangement in the industry. Institutional liquidity providers do not typically price in the possibility that a client's regulatory dispute becomes their own civil exposure. From what has emerged in a previous position working at the edge of these questions, the moment counterparty institutions face direct state liability, their legal departments recalibrate participation thresholds — sometimes faster than the underlying litigation resolves.

The question no one has fully priced is what Susquehanna does if this case proceeds to discovery. Kalshi can sustain a regulatory fight; it was built expecting one. A trading firm defending its role as a passive market-maker in state court, in Utah, is a different calculation entirely. Kalshi's CFTC preemption argument may yet succeed on appeal. But the Utah complaint does not need to win to change Susquehanna's position at the table, and Susquehanna's position at the table is one of the structural facts that makes Kalshi's markets function at the depth they currently do.