Utah charges Kalshi and two founders on 14 felony counts

Utah prosecutors filed 14 felony charges on Wednesday against the prediction market platform Kalshi and its two co-founders. The filings mark the first criminal case in the United States to target a major operator in the prediction market sector. For customers in the state, the move signals that state authorities may pursue criminal penalties for participation in these platforms, potentially including jail time for executives.

The conflict between Utah and Kalshi began earlier this year when the state sought to enforce its gambling prohibition against the company. A federal judge rejected Kalshi's request to halt the state’s enforcement efforts. That decision allowed Utah to proceed with its legal strategy, which now includes criminal prosecution. The state’s action follows a similar dispute in Arizona, where Kalshi also challenged the state’s regulations.

The charging documents list 13 counts for violating the state’s gambling ban and one count for profiting from illegal activity. The charges name the company, Chief Executive Officer Tarek Mansour, and Chief Operating Officer Luana Lopes Lara. Utah Attorney General Derek Brown stated that the company continued operating in the state after the federal court confirmed that Utah’s laws applied. Brown emphasized that the product’s label does not change its legal nature.

“Gambling is illegal in Utah, whether you place the bet, run the game, or promote it,” Brown said. He added that federal registration does not place a company above state law. The attorney general’s office has not yet specified which criminal penalties it will seek, though the felony classification allows for imprisonment.

Kalshi responded to the charges by calling them a “crazy overreach.” The company stated that Utah is “clearly playing politics” and said it looks forward to resolving the matter in court. This mirrors the company’s argument in Arizona, where it won a favorable ruling. Kalshi maintains that prediction markets fall exclusively under federal jurisdiction and should not be subject to state gambling statutes.

The case is one of roughly 20 active legal disputes between state regulators and the prediction market industry. These lawsuits have created a fragmented set of rules across the country. Analysts expect the U.S. Supreme Court will eventually intervene to resolve the conflict between state and federal authority. The next major step will be for the state to file the formal complaint in district court, setting the stage for a pretrial hearing.

The legal battle has drawn attention to the growing size of the prediction market industry. Kalshi continues to operate in Utah while the criminal case proceeds. The company’s next move will likely involve a motion to dismiss or a request for a stay of the criminal case, as it did in other jurisdictions.