Utah Files 14 Felony Charges Against Kalshi Founders

Utah Attorney General Derek Brown announced on Wednesday that the state has filed criminal charges against prediction market operator Kalshi and two of its executives. The filing follows a federal court ruling that rejected the company's attempt to stop Utah from enforcing its anti-gambling laws. The move signals a potential shift in how states confront the expanding prediction market industry.

The charging documents list 13 counts for violating the state's prohibition on gambling. A 14th count alleges that the defendants profited from illegal activity. The state named Kalshi along with its co-founders, Tarek Mansour, who serves as chief executive officer, and Luana Lopes Lara, who serves as chief operating officer. The office did not immediately specify the criminal penalties it seeks, though the felony charges carry the possibility of jail time.

Brown stated that Kalshi continued to operate in Utah despite the federal court ruling. "Gambling is illegal in Utah, whether you place the bet, run the game, or promote it," Brown said. He added that labeling the activity a prediction market does not change its nature, and federal registration does not place a company above state law. Kalshi responded to the filing by calling it a crazy overreach. The company stated that Utah is clearly playing politics and expects to stop the charges in court, similar to its outcome in Arizona.

Litigation over prediction markets has spread across roughly 20 states. Analysts expect the U.S. Supreme Court will eventually resolve the conflict between state and federal regulatory authority. Kalshi maintains that prediction markets fall exclusively under federal jurisdiction. Under President Donald Trump, the Commodity Futures Trading Commission has agreed with that view. The agency has sued at least 10 states, including Utah, to stop them from regulating the markets.

Arizona became the first state to file criminal charges against Kalshi earlier this year. That case involved misdemeanor accusations of operating an illegal gambling business. A judge placed that case on hold. Daniel Wallach, a lawyer at the University of Miami School of Law who specializes in sports wagering, noted that Arizona's authority to pursue those charges could soon be restored. The 9th U.S. Circuit Court of Appeals in San Francisco recently refused to let Kalshi restart trading on sports and elections events in Nevada while it fights the state's shutdown effort.

Wallach described Utah's pursuit of felony charges as a potential shift in strategy. Most states have primarily pursued civil actions against prediction market operators. He expects to see more cases like Utah's. Wallach suggested the criminal charges could serve as a bellwether for how other states approach Kalshi and its competitor Polymarket following the Nevada appellate court victory.

Kalshi sued Utah in February, asking a federal judge to prevent the state from enforcing its gambling restrictions. The lawsuit coincided with Utah nearing the enactment of legislation intended to limit prediction markets in the state. A federal judge rejected Kalshi's request, ruling that the Commodity Exchange Act does not prevent state enforcement. The 10th U.S. Circuit Court of Appeals in Denver declined to halt Utah's regulatory enforcement last month while Kalshi appeals.

Last week, Utah filed a separate civil suit against Kalshi and several related companies. The state court case asks the platform to stop trading on sports, elections, politics, culture, and other outcomes within Utah. The state also requested a court-approved geolocation provider to enforce the ban. The attorney general's office asked the court to require the defendants to surrender the profits they made in Utah.