Utah Files Criminal Charges Against Prediction Market Kalshi
Utah has filed criminal charges against prediction market Kalshi and its two co-founders, accusing them of illegally promoting gambling within the state, ABC4 reported Wednesday.
Kalshi EX LLC, along with CEO Tarek Mansour and COO Luana Lopes Lara, face charges including one count of pattern of unlawful activity, a second-degree felony; 12 counts of online gambling promotion, a third-degree felony; and one count of gambling promotion, a misdemeanor, according to charging documents.
“Gambling is illegal in Utah, whether you place the bet, run the game, or promote it,” Utah Attorney General Derek Brown stated. “Calling it a ‘prediction market’ doesn’t change what it is, and being federally registered doesn’t put a company above the law.”
Prosecutors allege that a special agent with the Utah State Bureau of Investigation created an undercover account as a Utah resident and placed 12 wagers on sports, including NFL and college games, in September. The agent’s location was confirmed to be within the state, and Kalshi allegedly profited from fees charged on each bet.
The Attorney General’s office has not specified the penalties it will seek, although the felony charges carry the potential for jail time, the Associated Press reported.
Kalshi responded to the charges, stating, “This is a crazy overreach; Utah is clearly playing politics. We look forward to putting a stop to this in court, just like we did in Arizona.”
The criminal charges intensify a dispute that already involves federal authorities. Utah, whose state constitution prohibits gambling, sued Kalshi in state court last week. On Tuesday, the Commodity Futures Trading Commission (CFTC) sued Utah to prevent its enforcement actions against CFTC-registered exchanges, marking the tenth state the agency has taken to court.
“Congress entrusted the CFTC to be the federal regulator with sole responsibility to oversee these markets,” said CFTC Chairman Michael Selig.
Utah has seen some success in its legal challenges. In August, U.S. District Judge Robert Shelby rejected Kalshi’s attempt to block enforcement, ruling that federal law does not preempt Utah’s ability to enforce its anti-gambling laws. Kalshi is appealing this decision to the Tenth Circuit, which denied its request for an injunction in September.
President Donald Trump has previously supported the CFTC, emphasizing in May the “critically important” nature of maintaining the CFTC’s exclusive authority over prediction markets and labeling state officials challenging these platforms as “scum.”
Federal appeals courts have reached differing conclusions on whether states can apply gambling laws to prediction markets. The Third Circuit ruled in April that New Jersey cannot regulate sports contracts on these platforms, while the Sixth and Ninth Circuits sided with Ohio, Tennessee, and Nevada in August and September. New Jersey, backed by 39 other states and the District of Columbia, has asked the Supreme Court to resolve the issue.
“Different judges in different places say different things,” Isaac Rose-Berman, a gambling policy fellow at the American Institute for Boys and Men, told ABC4. “It’s just going to keep escalating and eventually get to the Supreme Court.”
