Utah brings criminal gambling case against Kalshi and its founders

Utah has filed criminal charges against prediction-market operator Kalshi and its co-founders, Tarek Mansour and Luana Lopes Lara, alleging they illegally promoted online gambling in a state whose constitution bars the Legislature from authorising gambling.

Attorney General Derek Brown filed the case on Oct. 28 in a Salt Lake City district court. KalshiEx LLC faces one count of pattern of unlawful activity, a second-degree felony; 12 counts of online gambling promotion, each a third-degree felony; and one count of general gambling promotion, a class A misdemeanor.

The charges rest in part on an undercover investigation. State investigator Scott Eggerman opened a Kalshi account on Sept. 13 and placed 12 wagers over 11 days on NFL, MLB and Utah sporting events, according to the charging allegations. The investigator repeatedly confirmed he was in Utah, and the company allegedly charged fees of between 3 cents and 78 cents for each transaction.

Brown said that calling the products prediction markets did not alter their legal character under state law. “Gambling is illegal in Utah, whether you place the bet, run the game, or promote it,” he said, adding that federal registration did not put a company above Utah law.

Kalshi describes itself as a federally regulated financial exchange and maintains that prediction markets fall exclusively under federal jurisdiction. The company called the charges a “crazy overreach” and said Utah was “clearly playing politics”, adding that it expected to defeat the case in court as it had in Arizona.

The criminal case follows Utah's civil lawsuit against Kalshi and related entities, which sought to stop the platform offering contracts to Utah residents and recover alleged proceeds, as we reported on Oct. 20. That civil complaint alleges that Utah customers could wager on sports, elections, politics and other outcomes, and that Kalshi received between $30.5 million and $61.1 million from Utah accounts between February and Oct. 19.

Utah’s civil complaint also alleges that the Kalshi corporate group offered bets to Utah residents by at least September 2024, including after a federal court rejected KalshiEx’s argument that Utah law did not apply. It cites company marketing that described Kalshi as “The First Nationwide Legal Sports Betting Platform” and said sports betting was legal “in All 50 States on Kalshi.”

The charges arrive after courts declined, for now, to shield Kalshi from Utah enforcement. U.S. District Judge Robert J. Shelby ruled in August that the Commodity Exchange Act did not prevent Utah from applying its gambling laws to Kalshi’s sports contracts. The 10th U.S. Circuit Court of Appeals then denied Kalshi’s request to block enforcement while its appeal continued on Sept. 8.

The federal government has taken the opposite view. The Commodity Futures Trading Commission has sued Utah, arguing that state anti-gambling law is preempted when applied to event contracts traded on federally regulated exchanges. CFTC Chairman Michael S. Selig said the agency had the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives.

Utah is not alone in pursuing the company. Arizona filed criminal charges against Kalshi in March, the first such state prosecution of a CFTC-registered prediction-market operator, although a federal judge later enjoined that case and Arizona appealed. Litigation over prediction-market regulation has spread to roughly 20 states, with analysts expecting that the fragmented jurisdictional dispute may ultimately reach the U.S. Supreme Court.