Utah has filed 14 criminal charges, including 13 felony counts, against prediction market operator Kalshi and its two co-founders, Tarek Mansour and Luana Lopes Lara. The case marks only the second time a US state has brought criminal charges against a federally registered prediction market operator, following Arizona in March, and signals a harder line from state regulators against platforms offering sports-linked event contracts.
What happened
Utah Attorney General Derek Brown filed the charges in a state court in Salt Lake County on 28 October.
The charges against Kalshi and its two co-founders include one count of engaging in a pattern of unlawful activity, a second-degree felony, 12 counts of online gambling promotion, third-degree felonies, and one count of general gambling promotion, a misdemeanour.
The criminal case follows a civil lawsuit Utah had filed against Kalshi the previous week.
Utah separately seeks up to $61.2 million in allegedly unlawful fees through its civil lawsuit.
The charges rest on an undercover operation by the state’s own investigators.
An undercover investigator placed 12 sports wagers totaling $114.87 and lost $25.10.
The agent used a Utah address, phone number, and debit card to access Kalshi, and the platform allegedly allowed the agent to place 12 separate sports wagers.
Kalshi has rejected the allegations outright. A company spokesperson told reporters
“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 timing is notable:
the move follows a lawsuit Brown filed last week over bets on sports, elections, and politics, and comes a day after the CFTC sued Utah to block enforcement of its anti-gambling laws against prediction markets.
Brown defended the state’s position in a public statement, arguing
“Gambling is illegal in Utah, whether you place the bet, run the game, or promote it,” and that describing a product as a prediction market does not change its nature or exempt a company from state law.
Why it matters
For operators and suppliers watching the US prediction markets boom, the Utah case raises the stakes considerably. Unlike earlier civil actions, this filing names Kalshi’s chief executive and chief operating officer personally as co-defendants, exposing individual executives to felony liability rather than just corporate fines. Commentators have framed this as a deliberate change of tactic by state authorities.
The felony charges could represent a new tactic in how states try to assert regulatory authority over the fast-expanding activity, a clash that appears headed to a showdown at the U.S. Supreme Court.
The dispute also highlights the jurisdictional tangle facing the sector, with federal and state authorities pulling in opposite directions. The Commodity Futures Trading Commission has taken Kalshi’s side against Utah even as the state pursues criminal sanctions, leaving operators that partner with or compete against prediction market platforms uncertain about which regulatory framework ultimately prevails. Licensed sportsbooks that have long operated under state gambling law may view the episode as validation of calls for prediction markets to face equivalent licensing and tax obligations.
Affiliates and marketing partners promoting prediction markets content should treat the case as a signal to review how they frame these products, particularly in states where legal status remains contested. Promotional content that blurs the line between “trading” and “betting” could itself become a point of regulatory scrutiny, as Utah’s charge of general gambling promotion demonstrates.
The bigger picture
Utah’s action is not an isolated event.
Arizona filed criminal charges against Kalshi in March 2026, marking the first criminal prosecution ever of a CFTC-registered prediction market operator offering event contracts in the U.S.
That Arizona case did not hold:
a federal judge blocked that case in May, ruling federal law preempts state gambling enforcement against sports event contracts.
Utah is proceeding regardless, betting that its own courts or ultimately the Supreme Court will side with state authority over federal preemption arguments.
The case lands amid a wider reckoning over prediction markets’ place in the gambling ecosystem, a theme this site has tracked closely in recent weeks, including the scrutiny facing Polymarket’s marketing practices and the entry of major sports leagues into the space. With state attorneys general, the CFTC and federal courts all now active participants, the legal architecture governing US prediction markets remains unsettled, and operators building strategy around these products face a genuinely fluid regulatory picture heading into 2027.
Sources
- GamblingNews – Kalshi and Founders Targeted by 14 Criminal Charges in Utah
- The Block – Utah files criminal charges against Kalshi, executives over alleged illegal gambling
- Deseret News – Utah files criminal charges against Kalshi and its founders
- CDC Gaming – Utah files 14 criminal charges against Kalshi and its founders
- SiGMA News – Utah files criminal charges against Kalshi and co-founders
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