Utah Kalshi criminal charges name both founders in 14 counts

The fight over prediction markets has moved into a criminal courtroom in Salt Lake City. The Utah Kalshi criminal charges, filed on Wednesday, accuse the company and its two co-founders of promoting illegal gambling in a state that bans every form of it.

What happened

Attorney General Derek Brown charged KalshiEX LLC, chief executive Tarek Mansour and chief operating officer Luana Lopes Lara with 14 counts: one second-degree felony for a pattern of unlawful activity, 12 third-degree felonies for online gambling promotion and one class A misdemeanor for general gambling promotion, according to the charging document.

The case rests on an undercover account. A state agent opened it on Sept. 13 with a Utah address, phone number and bank account, confirmed his location to Kalshi, and over the following two weeks placed a dozen wagers on NFL, college football, MLB, NHL and MLS games. The Salt Lake Tribune put the total staked at $114. Kalshi charged a fee on each trade, from 3 cents to 78 cents, the filing says.

The document lists each bet. One was a $5 spread wager that the University of Utah would beat Utah State by more than 27.5 points; the platform showed a 53% chance of a payout, charged a 16-cent fee, and the agent won $4.13 when Utah won by 36. Another wager was placed on a Utah Mammoth NHL game against the Colorado Avalanche, The Salt Lake Tribune noted. The charging papers say Kalshi kept taking wagers from Utah after a federal judge ruled in August that state gambling law applies to it.

"Calling it a 'prediction market' doesn't change what it is," Brown said, according to the Deseret News. A Kalshi spokesperson called the charges "a crazy overreach" and said the company would fight them in court, as it did in Arizona, where a federal judge blocked a similar prosecution that the state is appealing.

Why it matters

The Utah Kalshi criminal charges escalate a dispute that was already in civil court. The state sued Kalshi last week, as we reported in our story on the Utah Kalshi lawsuit, claiming the company earned between $30.5 million and $61.1 million from Utah accounts this year. U.S. District Judge Robert Shelby ruled in August that Utah's gambling laws apply to Kalshi's sports contracts, and the Tenth Circuit refused to pause that ruling in September.

Washington is pushing back. The CFTC sued Utah this week, arguing that it has "exclusive jurisdiction" over derivatives traded on federally regulated exchanges and that federal law preempts state gambling rules as applied to event contracts. Naming the founders personally raises the stakes for an industry already juggling state subpoenas and suits, including Kalshi's New York and Louisiana battles.

Arizona went first. It filed criminal charges against Kalshi in March, the first prosecution of a CFTC-registered event contract exchange in the US, the Deseret News said. Kalshi says it answers to federal law: "no single state should have a veto over it," spokesperson Jacki McGavick said of the earlier Utah lawsuit.

What's next

The Utah Kalshi criminal charges, the civil suit and the CFTC's federal complaint now run in parallel. A court will have to decide whether to pause the prosecution while the preemption question is litigated. The charging document is on the Utah attorney general's website.