Utah authorities have initiated legal action to bar the prediction-market firm Kalshi from operating within the state, marking the latest challenge faced by the company as it navigates regulatory scrutiny. The suit was filed in Utah state court on Tuesday, with Attorney General Derek Brown accusing Kalshi of functioning as an illegal gambling operation in a jurisdiction that prohibits such activities.

In the court filing, Brown described Kalshi as “the manager of a back-alley gambling den,” alleging that the firm has engaged in a “brazen pattern of unlawful conduct.” The state is seeking to recover millions of dollars in revenues that Kalshi earned from Utah residents, with the intention of distributing those funds back to the state’s population.

Kalshi operates a platform that allows users to trade event-based contracts, essentially taking “yes” or “no” positions on the outcomes of various events. The company maintains that these contracts qualify as financial “swaps,” which fall under the regulatory authority of the Commodity Futures Trading Commission (CFTC). Kalshi argues that its federal approval by the CFTC preempts state laws that would otherwise restrict its activities.

Utah is not the only state to have challenged Kalshi’s operations. The firm previously secured a favorable ruling in an appeals court case involving New Jersey, affirming its legal status under federal regulation. However, New Jersey subsequently sought a review of that decision by the U.S. Supreme Court, signaling ongoing contention over whether states have the authority to regulate or prohibit these markets.

Kalshi co-founder Tarek Mansour addressed the dispute in a podcast interview on Wednesday, expressing confidence that regulatory efforts to curtail the firm’s business will ultimately not prevail. Though Mansour declined to provide specific odds on the outcome, he indicated the matter could reach the Supreme Court for a definitive ruling.

As legal battles continue across multiple states, Kalshi’s operations remain at the intersection of emerging financial technology and established gambling laws, raising complex questions about federal-state regulatory boundaries and the evolving nature of prediction markets in the United States.