Utah has filed 14 criminal charges against prediction market platform Kalshi and two of its top executives, alleging the company illegally promoted online gambling within the state. The charges name CEO Tarek Mansour and Chief Operating Officer Luana Lopes Lara, along with the company itself. According to charging documents filed on Wednesday, the counts include one second-degree felony count alleging a pattern of unlawful activity, 12 third-degree felony counts of online gambling promotion, and one Class A misdemeanor count of general gambling promotion.
The criminal filing stems from an undercover investigation by the Utah Attorney General's Office. Between September 13 and September 26, an investigator created a Kalshi account using a Utah residential address, local phone number, and Utah-issued payment credentials. The investigator then placed 12 wagers on sporting events including football, soccer, baseball, and hockey, spending approximately $114.87 with a net loss of $25.10. Utah prosecutors argue that Kalshi's acceptance of these transactions violated state gambling restrictions, contending that offering contracts tied to sports outcomes amounts to promoting online gambling regardless of whether the platform labels them as event contracts rather than bets.
Utah Attorney General Derek Brown stated that Kalshi has continued operating in the state despite a federal court ruling earlier this year that upheld Utah's ability to enforce its anti-gambling laws. "Gambling is illegal in Utah, whether you place the bet, run the game, or promote it," Brown said in a statement. "Calling it a 'prediction market' doesn't change what it is, and being federally registered doesn't put a company above the law." The criminal charges follow a civil lawsuit Brown filed against Kalshi and related Susquehanna trading firms, in which Utah estimated that Kalshi-related businesses generated between $30.6 million and $61.2 million in fees associated with Utah accounts.
Kalshi rejected the allegations. A company spokesperson called the charges a "crazy overreach" and stated that the company looked forward to challenging them in court, pointing to its earlier success in Arizona. "We look forward to putting a stop to this in court, just like we did in Arizona," the statement said. Kalshi maintains that prediction markets fall exclusively under federal jurisdiction and are not governed by state gambling laws.
The Utah charges represent a significant escalation in regulatory strategy. Arizona became the first state to file criminal charges against Kalshi earlier this year, but a federal judge subsequently placed that case on hold. Utah's pursuit of felony charges marks a potential shift from the civil actions that states have primarily pursued against prediction market operators. Utah has been joined by at least a dozen other states—including New York, Nevada, New Mexico, Washington, and Connecticut—in taking legal action against Kalshi or similar platforms.
The charges come amid a broader clash between state and federal regulatory authority. The Commodity Futures Trading Commission, arguing it has exclusive jurisdiction over prediction markets, filed a lawsuit against Utah on October 26, seeking to prevent the state from enforcing its gambling restrictions against Kalshi. However, two federal appeals courts have ruled against Kalshi and Polymarket in their bids to block state-level oversight, though the 3rd Circuit Court of Appeals ruled in April that the CFTC has exclusive authority in New Jersey. New Jersey has asked the Supreme Court to take up its case, and legal analysts expect the conflict between state and federal regulatory authority to eventually reach the nation's highest court.
Kalshi and its executives have not been convicted and remain presumed innocent. The defendants have been issued summonses to respond to the charges. The case is likely to become a bellwether for how other states approach prediction market regulation and enforcement against companies that continue operating despite state-level prohibitions.
