Susquehanna's presence in Utah suit reframes prediction market risk

Derek Brown, Utah's Attorney General, filed a 63-page complaint on October 20 in Salt Lake City's 3rd District Court. The defendants include KalshiEx, Kalshi Klear, and Kalshi Trading — and two Susquehanna-affiliated entities: Susquehanna International Group and Susquehanna Government Products.

That second set of names is where this story goes somewhere the newsroom hasn't been yet.

Every piece of coverage on the Utah enforcement action has treated this as a Kalshi story. A prediction market operator versus a state with a constitutional gambling prohibition dating to 1896. Federal preemption failed in August when Judge Robert Shelby ruled Utah's laws apply to Kalshi's sports contracts. State court followed, as it almost always does once federal cover is gone. The structure is familiar.

What is less familiar is a major institutional trading firm sitting inside a state gambling complaint. Susquehanna is not a prediction market startup making regulatory arguments about the Commodity Exchange Act. It is one of the more substantial market-making operations in the world. Its government products affiliate suggests a presence in regulated contract markets that goes well beyond consumer-facing event contracts. Utah's decision to name both entities, seeking disgorgement of profits alongside the injunctive relief against Kalshi, extends the enforcement theory into market-making itself.

Brown's complaint estimates Kalshi earned between $30.5 million and $61.1 million from Utah accounts based on fee calculations, and that Utah bettors lost at least $5.5 million. Those are the numbers Utah needs to establish damages. But the disgorgement claim against Susquehanna raises a different question: whether liquidity providers who facilitate event contract trading can be held liable under state gambling law for profits they derived from that facilitation.

I have not seen that argument succeed against a market-maker in an analogous context. I have seen it attempted. The structural challenge is that Susquehanna's role, if it mirrors standard prediction market liquidity provision, would be closer to a specialist on an exchange floor than to a bookmaker. Utah's complaint presumably addresses this — the 63 pages exist for a reason — but the theory requires a court to treat market-making in a CFTC-regulated product as gambling participation under state law. That is a significant extension, and Shelby's August ruling, while it rejected federal preemption, did not specifically reach the market-maker question.

If a Utah court accepts that argument, the implications run well past Kalshi. Every firm providing liquidity on sports event contracts would face exposure in states with strong anti-gambling statutes. The enforcement perimeter would shift from exchange operators to anyone with a profitable relationship to the contracts. That is a different kind of deterrent — and a more effective one, because it targets the capital that makes the market function rather than the platform that hosts it.

I think the market-maker liability theory is the harder claim, and Utah may have included it partly as settlement leverage. But Brown's office named Susquehanna specifically, in a public complaint, after winning at the federal level. That is not a filing built for quick settlement. The question of whether institutional trading profits derived from state-prohibited gambling can be disgorged under Utah law is now in front of a court, and the answer will matter far beyond Salt Lake City.