Utah Attorney General Derek Brown has filed 14 criminal charges against prediction market platform Kalshi and its co-founders, Tarek Mansour and Luana Lopes Lara, accusing the company of illegally operating and promoting online gambling in the state. The charges follow an undercover investigation in which a state agent placed 12 sports-related wagers through Kalshi’s platform. The case escalates a nationwide legal battle over whether prediction markets should be regulated as financial derivatives by the Commodity Futures Trading Commission (CFTC) or as gambling under individual state laws.
On October 28, Utah prosecutors filed criminal charges against KalshiEX LLC, CEO Tarek Mansour and co-founder Luana Lopes Lara in Salt Lake County.
The complaint includes:
12 felony counts of online gambling promotion.
One second-degree felony count alleging a pattern of unlawful activity.
One misdemeanor count of general gambling promotion.
Utah prohibits gambling, and state officials argue that Kalshi’s sports-related event contracts violate those restrictions regardless of how the platform classifies its products.
Attorney General Derek Brown maintains that federal registration does not exempt a company from complying with state gambling laws.
The charges are allegations, and neither Kalshi nor its executives have been convicted of the offenses.
According to the criminal complaint, an undercover agent working for the Utah Attorney General’s Office created a Kalshi account using a Utah residential address, phone number and locally issued debit card.
The agent was able to access the platform and place 12 sports-related wagers during September.
The transactions involved professional and college sporting events, including football, baseball and hockey.
According to local reporting, the agent risked approximately $114.87 across the transactions and recorded a net loss of $25.10.
Prosecutors argue that these transactions demonstrate Kalshi was facilitating activities prohibited under Utah’s gambling laws.
Kalshi disputes that interpretation, maintaining that its contracts are federally regulated financial instruments rather than conventional gambling products.
The criminal case comes just one day after the CFTC filed a federal lawsuit against Utah seeking to prevent the state from enforcing gambling restrictions against federally regulated prediction markets.
CFTC Chairman Michael Selig argues that Congress gave the agency exclusive authority over commodity derivatives, including event contracts offered by federally registered exchanges.
Under that interpretation, individual states cannot prohibit contracts simply because their outcomes resemble sports betting or other wagering activities.
Utah takes the opposite position, arguing that federal financial regulation does not eliminate its authority to enforce state gambling laws.
The disagreement centers on a major legal question: Are sports-related prediction market contracts financial derivatives, gambling products or potentially subject to both regulatory frameworks?
The answer could determine how platforms such as Kalshi operate across the United States.
Kalshi strongly criticized Utah’s decision to pursue criminal charges.
A company spokesperson described the prosecution as an overreach and said Kalshi intends to challenge the allegations in court.
Kalshi pointed to its earlier legal victory in Arizona, where a federal judge blocked that state’s criminal prosecution against the company.
However, federal courts have not reached consistent conclusions across jurisdictions.
In Utah, a federal judge previously rejected Kalshi’s attempt to prevent the state from enforcing its gambling laws, and the dispute remains subject to further litigation.
These differing rulings have created uncertainty for prediction market companies seeking to operate nationwide.
The criminal prosecution follows a separate civil lawsuit filed by Utah on October 20.
That complaint accused Kalshi and two trading firms associated with Susquehanna of operating an illegal gambling business.
The state challenged event contracts involving sports, elections, politics and other real-world outcomes.
Utah is seeking to stop allegedly unlawful activities and recover profits it says were generated through transactions involving state residents.
The criminal charges represent a significant escalation because they seek to establish criminal liability rather than relying exclusively on civil enforcement.
The cases remain separate legal proceedings.
Kalshi is not the only prediction market company facing questions about state and federal oversight.
Platforms such as Polymarket have also become part of the broader debate surrounding event contracts and gambling regulation.
Several states, including Arizona, Connecticut, Massachusetts, Michigan and Nevada, have pursued enforcement actions, restrictions or litigation involving prediction markets.
Meanwhile, the CFTC has filed lawsuits against multiple states to defend its claimed regulatory authority.
The resulting legal disputes could shape the future of event contracts covering sports, elections, economic indicators and other measurable outcomes.
A central issue is whether the federal regulatory framework governing derivatives prevents states from applying their gambling laws to federally registered exchanges.
The question may ultimately require a definitive ruling from the U.S. Supreme Court, although no final nationwide resolution has been reached.
Prediction markets have become an increasingly important segment of the digital asset economy, particularly as blockchain-based platforms introduce new ways to trade contracts tied to real-world events.
Although Kalshi operates as a federally regulated exchange rather than a decentralized cryptocy protocol, its legal disputes have implications for blockchain-based competitors and the wider prediction market industry.
A ruling favoring federal authority could make it easier for regulated platforms to offer event contracts across state lines.
Conversely, rulings allowing broader state enforcement could require platforms to restrict certain products geographically or obtain additional regulatory approvals.
The outcome may also influence how companies design sports-related contracts and determine which markets are available to U.S. customers.
Utah’s criminal prosecution introduces another significant development in the dispute between state gambling regulators and the federal government.
The case is especially notable because it targets Kalshi’s executives personally while the CFTC is actively challenging Utah’s authority in federal court.
With different courts reaching different conclusions, prediction market operators face continuing uncertainty about where and how their products can legally be offered.
Coinbase has confirmed that customer contact information and limited transaction data were exposed following a…
Polygon Labs and the Solana Foundation have announced a major partnership to connect Solana's rapidly…
South Korean cryptocy exchange Bithumb has confirmed a cybersecurity breach that exposed sensitive personal information…
Georgia Secretary of State Brad Raffensperger has confirmed that an artificial intelligence agent developed by…
Google Cloud has introduced Google Multi-Party Compute (MPC), a new cryptocy custody security platform designed…
Artificial intelligence company Anthropic has officially filed paperwork with the U.S. Securities and Exchange Commission…