Utah Charges Kalshi Founders With Felonies

Utah prosecutors filed felony charges on Wednesday against prediction market operator Kalshi and two of its top executives. The state accused the company and its co-founders, CEO Tarek Mansour and COO Luana Lopes Lara, of violating state gambling statutes. The complaint includes 13 counts for operating illegal gambling and one count for profiting from that activity.

Utah Attorney General Derek Brown stated that Kalshi continued to operate in the state even after a federal judge ruled that local gambling laws applied to the firm. Brown argued that federal registration does not exempt a company from state law. He noted that the activity is illegal whether the entity places the bet, runs the game, or promotes it.

The conflict began in February when Kalshi sued Utah in federal court. The company sought to block the state from enforcing its gambling restrictions. A federal judge rejected the request, ruling that the Commodity Exchange Act did not prevent Utah from applying its own laws. The 10th U.S. Circuit Court of Appeals in Denver declined last month to halt the state's enforcement efforts during the appeal.

Kalshi responded to the new charges by calling them a "crazy overreach." The company said Utah was "playing politics" and expressed confidence in winning the case in court, similar to its experience in Arizona. Arizona became the first state to file criminal charges against Kalshi earlier this year, though a judge later paused that specific case.

Legal analyst Daniel Wallach, who teaches at the University of Miami School of Law, said Utah's move marks a shift in strategy. Most states have pursued civil actions, but Utah is using felony charges. Wallach suggested this could influence how other states approach Kalshi and competitor Polymarket. He cited a recent 9th Circuit decision in San Francisco that allowed Nevada to continue fighting Kalshi's trading on sports and election events.

The dispute is part of a wider legal battle across roughly 20 states. The Commodity Futures Trading Commission, under President Donald Trump, has sued at least 10 states to stop them from regulating prediction markets. The agency has sided with Kalshi's position that these markets fall under federal jurisdiction. A showdown at the U.S. Supreme Court appears likely as litigation spreads.

Utah filed a separate civil lawsuit last week against Kalshi and related companies. That case asks a state court to stop the platform from trading on sports, elections, politics, and culture outcomes within the state. The attorney general's office also requested that the defendants surrender profits earned in Utah and use a court-approved geolocation provider to enforce the ban.