Utah files criminal charges against Kalshi and its co-founders

Utah filed felony charges Wednesday against prediction market operator Kalshi and its two co-founders, escalating a dispute over whether the company’s activities violate the state’s ban on gambling.

Attorney General Derek Brown filed the charges in a Salt Lake City district court against Kalshi, chief executive officer Tarek Mansour and chief operating officer Luana Lopes Lara. The complaint alleges 12 counts of online gambling promotion, one count of general gambling promotion and one count of a pattern of unlawful activity, according to Al Jazeera.

The case follows an August ruling by a federal judge that Utah could enforce its anti-gambling laws against prediction markets such as Kalshi and Polymarket, Al Jazeera reported. Kalshi had sought to prevent the state from applying those laws to its operations.

Brown said 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. Calling it a ‘prediction market’ doesn’t change what it is, and being federally registered doesn’t put a company above the law,” he said in a statement.

Kalshi rejected the charges, calling them a “crazy overreach” and saying that “Utah is clearly playing politics”.

“We look forward to putting a stop to this in court, just like we did in Arizona,” the company said in a statement.

The Utah attorney general’s office did not immediately say what criminal penalties it would seek, The Guardian reported. The felony charges carry the possibility of jail time.

The prosecution puts the state’s challenge to Kalshi in a new setting. The earlier ruling addressed Utah’s ability to enforce its gambling laws against prediction markets; the charges now name not only the company but also Mansour and Lopes Lara. The complaint accuses them of illegally promoting online gambling, according to Al Jazeera.

Kalshi maintains that prediction markets fall exclusively under federal jurisdiction and are not governed by state gambling laws. Utah takes the opposite view: Brown argues that the company’s federal registration does not exempt it from the state’s gambling ban.

The disagreement extends beyond Utah. Litigation over the regulation of prediction markets has spread across roughly 20 states, creating a fragmented legal landscape that analysts say is likely to be settled by the US Supreme Court, The Guardian reported. For now, the Utah case places criminal charges alongside the broader court fight over whether states can apply their gambling laws to federally registered prediction markets.