Utah Files Felony Charges Against Kalshi and Its Co-Founders

By Tom Whitfield

Utah filed 14 criminal counts against prediction market KalshiEX LLC, CEO Tarek Mansour and COO Luana Lopes Lara on Wednesday, alleging the company and its co-founders illegally promoted gambling in the state.

According to the charging documents, the defendants face 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 gambling promotion, a misdemeanor.

What do Utah’s criminal charges allege?

Prosecutors say a special agent with the Utah State Bureau of Investigation created an undercover account as a Utah resident and placed 12 wagers in September. The bets covered NFL and college games, and the agent passed a location check confirming he was in Utah.

Prosecutors allege Kalshi earned proceeds from the fees it charged on each wager. That allegation connects the 12 bets directly to the company’s fee income and provides the financial basis for the promotion charges.

Utah Attorney General Derek Brown said: “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.” His statement targeted both the product label and Kalshi’s federal registration.

Brown’s office did not specify what penalties it would seek. The Associated Press reported that the felony charges carry the possibility of jail time.

Kalshi responded: “This is a crazy overreach; Utah is clearly playing politics.” The company said it expected to stop the case in court, as it had done in Arizona.

Why is the CFTC suing Utah?

Utah’s constitution bans gambling, and the state sued Kalshi in state court last week. On Tuesday, the Commodity Futures Trading Commission sued Utah to block enforcement against federally regulated exchanges, marking the 10th state the agency has taken to court.

The case now has two tracks: Utah’s criminal prosecution over alleged promotion and the CFTC’s federal challenge to state enforcement. CFTC Chairman Michael Selig said Congress entrusted the agency with sole responsibility for overseeing prediction markets.

Utah won the first federal round in August. U.S. District Judge Robert Shelby rejected Kalshi’s bid to block enforcement, ruling that federal law did not preempt Utah’s ability to enforce its anti-gambling laws. Kalshi appealed to the Tenth Circuit, which denied its request for an injunction in September.

President Donald Trump backed the CFTC in May, saying it was critically important to maintain the agency’s exclusive authority over prediction markets. He also described several state officials who challenged the platforms as scum.

Where do the appeals courts stand?

Federal appeals courts have divided over whether states can apply gambling laws to prediction markets. In April, the Third Circuit ruled that New Jersey could not regulate sports contracts offered through the platforms.

The Sixth and Ninth Circuits sided with Ohio, Tennessee and Nevada in August and September. New Jersey has asked the Supreme Court to settle the issue, backed by 39 other states and the District of Columbia.

Isaac Rose-Berman, a gambling policy fellow at the American Institute for Boys and Men, said the conflicting rulings would keep escalating until the question reached the Supreme Court. That institutional split leaves CFTC-registered prediction markets subject to different legal treatment depending on the jurisdiction.

The next enforcement window is Utah’s criminal case, while Kalshi’s Tenth Circuit appeal and New Jersey’s Supreme Court petition test the broader market structure: whether CFTC registration lets prediction markets operate nationally without state gambling enforcement.