Utah Brings Felony Charges Against Kalshi Executives, Escalating Prediction Market Regulation Fight

Utah filed criminal charges against prediction market operator Kalshi and two of its executives on Wednesday, escalating a dispute over whether states can police such platforms. The filing names co-founders Tarek Mansour, the company's chief executive officer, and Luana Lopes Lara, its chief operating officer. The charging documents contain 13 counts of violating the state's gambling prohibition and one charge covering profiting from illegal activity. Attorney General Derek Brown said Kalshi kept operating in Utah after a federal judge ruled the state's laws apply to the company. "Gambling is illegal in Utah, whether you place the bet, run the game, or promote it," Brown said. "Calling it a 'prediction market' doesn't change what it is, and being federally registered doesn't put a company above the law." Kalshi called the charges a "crazy overreach" and said Utah is "playing politics."

The case has moved quickly through the courts. Kalshi sued Utah in February to block enforcement of its gambling restrictions, just as the state prepared legislation to limit prediction markets. A federal judge rejected that request, finding the Commodity Exchange Act cited by Kalshi does not stop Utah from applying its laws. Last month, the 10th U.S. Circuit Court of Appeals in Denver declined to pause Utah's enforcement during the appeal. Last week, Utah also filed a state court suit asking a judge to halt Kalshi's trading on sports, elections, politics and culture outcomes within its borders and to require a court-approved geolocation provider. That filing also asks the court to force defendants to surrender profits made in Utah.

Utah's attorney general's office has not specified which penalties it will seek, though the felony counts carry possible jail time. Litigation over who regulates these markets spans roughly 20 states. The Commodity Futures Trading Commission has sued at least 10 states, including Utah this week, to stop them from regulating prediction markets. Arizona filed the first criminal case against Kalshi earlier this year on a misdemeanor gambling charge; a judge later put it on hold. Daniel Wallach, who teaches gaming law at the University of Miami School of Law, said Utah's felony approach differs from the civil actions states have mostly pursued so far.

The dispute is moving toward federal review. Daniel Wallach said Utah's felony charges "could be a bellwether for how other states approach Kalshi and Polymarket." Kalshi maintains that prediction markets fall exclusively under federal jurisdiction. The 9th U.S. Circuit Court of Appeals in San Francisco recently refused to let Kalshi resume trading on sports and election events in Nevada while it fights that state's effort to shut it down.