Utah Files 14 Criminal Charges Against Kalshi and Its Founders
Expertise: US Gaming, European Gaming Industry, iGaming
SALT LAKE CITY, Utah – State prosecutors filed 14 criminal charges against Kalshi and its two co-founders on October 28 over alleged illegal gambling. The charges expose company executives to potential criminal penalties as Utah escalates its enforcement efforts against prediction markets.
Utah Attorney General Derek Brown named Kalshi CEO Tarek Mansour and co-founder and COO Luana Lopes Lara in the criminal case filed in Salt Lake County. The allegations include 13 felony counts and one misdemeanor, marking a significant escalation in the state’s ongoing dispute with the federally regulated prediction market operator.
Utah Criminal Charges Center on 12 Sports Wagers
Utah prosecutors filed one second-degree felony count of pattern of unlawful activity, 12 third-degree felony counts of online gambling promotion and one misdemeanor count of general gambling promotion.
The charges stem from an undercover investigation conducted by the Utah Attorney General’s Office in September. Special Agent Scott Eggerman created a Kalshi account using a Utah residential address, local phone number and debit card before placing 12 sports-related wagers totaling $114.87.
The transactions involved professional football, baseball, hockey, soccer and college football games between September 13 and 26. Investigators allege that Kalshi allowed the agent to place wagers while physically located in Utah and collected transaction fees from the activity.
Prosecutors argue that these transactions constituted illegal online gambling promotion under state law. The pattern of unlawful activity charge also alleges that Kalshi derived revenue from prohibited transactions and used those proceeds to support its business operations.
Brown maintained that Kalshi’s registration as a financial exchange does not exempt it from Utah’s gambling restrictions.
Gambling is illegal in Utah, whether you place the bet, run the game, or promote it.
Criminal Case Follows Utah’s Earlier Civil Lawsuit
The prosecution follows Utah’s earlier civil lawsuit, filed on October 20. That action seeks to restrict Kalshi’s operations and recover allegedly unlawful gambling revenue, while the new case introduces criminal charges against the company and its founders.
The criminal filing also comes one day after the Commodity Futures Trading Commission (CFTC) sued Utah in federal court. The federal regulator argues that prediction market contracts fall under its jurisdiction and that states cannot independently prohibit contracts offered through federally regulated exchanges.
Utah maintains that sports event contracts offered to residents constitute gambling under state law, regardless of their classification as financial derivatives. In August, a federal judge rejected Kalshi’s request to block Utah from enforcing its gambling restrictions, although that decision did not finally resolve the underlying legal dispute.
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Kalshi Rejects Charges as Federal Regulatory Dispute Intensifies
Kalshi strongly disputed Utah’s latest action, describing the criminal charges as a “crazy overreach” and accusing the state of political motivations. The company said it intends to challenge the prosecution in court, maintaining that its event contracts are subject to federal commodities regulation rather than state gambling laws.
The dispute follows a similar criminal case brought against Kalshi in Arizona in March. A federal judge subsequently blocked that prosecution in April, providing temporary relief while the broader dispute over regulatory authority continued.
Utah’s case is the second criminal prosecution brought against Kalshi by a US state, adding a new dimension to legal challenges that have largely involved civil enforcement proceedings. The company’s founders have been issued summonses to respond to the charges rather than arrest warrants.
No criminal liability has been established, and the defendants will have an opportunity to contest the allegations. The next stage will involve proceedings in Utah’s state court, while parallel federal litigation continues over whether state gambling restrictions can apply to federally regulated prediction markets.
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