Utah Prosecutes: Kalshi and Founders Face Felony Charges in Gambling Dispute

Utah Attorney General Derek Brown filed criminal charges against Kalshi and two of its executives on Wednesday. The state accuses the prediction market operator of violating its ban on gambling. The felony counts include 13 violations of the state’s prohibition on gambling and one count for profiting from illegal activity.

The charging documents name Kalshi, CEO Tarek Mansour, and COO Luana Lopes Lara. Brown stated that the company continued operating in Utah despite a federal court ruling that the state’s gambling laws apply to it. He argued that the term prediction market does not change the nature of the activity. Brown said federal registration does not place a company above state law.

Kalshi responded by calling the charges a crazy overreach. The company claimed Utah is playing politics and expressed confidence in stopping the case in court, similar to its strategy in Arizona. The state has not yet specified the criminal penalties it seeks, though felony charges carry the possibility of jail time.

This move escalates a conflict between states and the federal government over regulatory authority. Litigation has spread across roughly 20 states. Under President Donald Trump, the Commodity Futures Trading Commission has agreed with Kalshi that prediction markets fall under federal jurisdiction. The agency has sued at least 10 states, including Utah, to stop them from regulating the markets.

Arizona became the first state to file criminal charges against Kalshi earlier this year. A judge placed that case on hold after the 9th U.S. Circuit Court of Appeals refused to let Kalshi restart trading in Nevada while it fights the state’s shutdown efforts. Legal analyst Daniel Wallach noted that Utah’s felony charges represent a potential shift in strategy by states that have primarily pursued civil actions.

Wallach expects other states to follow Utah’s lead in pursuing Kalshi and Polymarket. He described the case as a potential bellwether for how states will approach these platforms. Utah sued Kalshi in February to prevent the state from enforcing gambling restrictions. A federal judge rejected that request, ruling that the Commodity Exchange Act does not prevent state enforcement.

The 10th U.S. Circuit Court of Appeals in Denver declined to halt Utah’s regulatory enforcement last month during Kalshi’s appeal. Last week, Utah also filed a state court suit to stop trading on sports, elections, politics, culture, and other outcomes. The state asked the court to use a court-approved geolocation provider to enforce the ban and ordered the defendants to give up profits made in Utah.