Who is on the other side of a prediction-market bet?
On Tuesday 20 October 2026, Utah sued Kalshi and two Susquehanna trading firms, alleging the market makers act like a betting house by taking the other side of users’ bets. Prediction markets are sold as exchanges where you trade against other people, not the house. This case asks who the other side actually is. Read by a marketer rather than a lawyer.
$30.6m–$61.2m
Utah’s estimate of Kalshi fees from Utah-based accounts through 19 October.
5 Kalshi companies + 2 Susquehanna firms
Susquehanna International Group and Susquehanna Government Products.
Market makers named
The first state AG action aimed at prediction-market market makers, per gaming lawyer Daniel Wallach.
Sports, elections, politics, culture, “mentions”
Utah wants these blocked, with tighter location checks.
What Utah is arguing.
The complaint says that calling a bet an “event contract” does not change what it is. It compares the platform operator to “the manager of a back-alley gambling den” that hosts bets and takes a cut. That was the line most coverage quoted.
The newer move is the second set of defendants. Utah alleges that Kalshi Trading and the two Susquehanna firms act like a betting house, taking bets against users and collecting when users lose. A market maker quotes both sides to keep a market liquid. Utah is arguing that, in practice, being the regular counterparty makes you the house.
Utah’s attorney general, Derek Brown, said the case is “part of a larger investigation” and hinted other platforms could follow.
The run of cases.
Per The Block.
What this means for anyone marketing prediction markets.
“Not a sportsbook” is a claim about the counterparty. The exchange pitch rests on users trading against each other. If a market maker sits on the other side of most of the flow, expect regulators to test the claim, not the label.
Know who your market makers are before a regulator asks. Utah named them as defendants. Partners further down the chain have been named before: Baltimore sued the apps that distribute Kalshi.
Category matters. Utah wants sports, election, politics, culture and “mentions” contracts blocked. Those are the markets most of the consumer marketing runs on.
Questions.
What is Utah alleging against Kalshi?
Utah’s attorney general, Derek Brown, sued five Kalshi companies on 20 October 2026, accusing them of running an illegal gambling business in the state. The complaint argues that calling bets “event contracts” does not change what Kalshi offers, and compares the platform operator to “the manager of a back-alley gambling den” that hosts bets and takes a cut. These are allegations, not court findings.
Why are Susquehanna firms named in the lawsuit?
Utah also sued Susquehanna International Group and Susquehanna Government Products. It alleges that Kalshi Trading and the two Susquehanna firms act like a betting house by taking bets against users and collecting money when they lose.
Is this the first case against prediction-market market makers?
Sports and gaming attorney Daniel Wallach described it as the first state attorney general enforcement action targeting prediction-market market makers, according to The Block.
How much does Utah say Kalshi made from Utah users?
Utah estimates Kalshi collected between $30.6m and $61.2m in fees from Utah-based accounts through 19 October 2026, while noting the actual figure could be much higher or lower.
What does Utah want the court to order?
It wants the companies to return money they allegedly made illegally, compensate the state and residents and pay damages. It also seeks to block sports, election, politics, culture and “mentions” bets, and wants more precise location checks to enforce those restrictions.
Is Kalshi facing other cases?
Yes. Connecticut and Baltimore sued in August over alleged unlicensed sports betting, and Baltimore also named distribution partners Coinbase, Robinhood and Webull. In September a federal appeals court ruled that Ohio and Tennessee could enforce their sports betting laws against Kalshi; Kalshi said it expected that ruling to be overturned. Brown said Utah’s case is part of a larger investigation.
Who is on the other side of a prediction-market trade?
On an exchange, the other side is whoever placed the opposite order. That can be another user or a market maker that quotes both sides to keep the market liquid. Utah’s case turns on that second group: when a firm is regularly taking the other side of users’ bets, the state argues it is acting as the house.
Is this legal advice?
No. It is a marketer’s summary of published reporting, for founders building or marketing these products.
Sources.
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