Utah’s attorney general filed 14 criminal counts against prediction market operator KalshiEX LLC and its two co-founders on October 28, escalating a fight over whether states can treat sports prediction contracts as gambling. The criminal information and summons filed in Utah’s Third Judicial District Court in Salt Lake County names CEO Tarek Mansour and COO Luana Lopes Lara alongside the company.
The case lands days after the Commodity Futures Trading Commission sued Utah itself, asking a federal court to stop the state’s enforcement against Kalshi on the argument that federal law pre-empts conflicting state gambling rules. Crypto.com’s exchange filed its own challenge to Utah’s authority the same day. Utah answered the federal suits with the criminal filing, which came days later.
Attorney General Derek Brown said in a statement: “Gambling is illegal in Utah, whether you place the bet, run the game, or promote it.” The charging document states that despite a federal judge’s August ruling against Kalshi and the Tenth Circuit’s September denial of an injunction, the defendants “have continued to provide or Offer to provide online gambling to individuals in the State of Utah.”
The counts split three ways: one second-degree felony for a pattern of unlawful activity, Utah’s racketeering-style charge; 12 third-degree felonies for online gambling promotion, one for each wager an undercover agent placed; and one class A misdemeanour for gambling promotion. Prosecutors built the case on an attorney general’s investigator who opened a Kalshi account on September 13 with a Utah address and a locally issued debit card, then placed 12 sports wagers totalling $114.87, covering NFL, college football, MLB, MLS and NHL games. No arrest warrants were issued; both executives were summoned to appear in court.
The pre-emption war behind the charges has been building all year. On August 4, Judge Robert J. Shelby of the federal district court in Utah ruled the Commodity Exchange Act does not pre-empt the state’s gambling laws as applied to Kalshi, and the Tenth Circuit refused to pause that ruling pending appeal on September 8. Utah pressed on with a civil complaint on October 20 seeking roughly $30.5m to $61.2m in restitution and profits from Kalshi and two Susquehanna firms, and sued to end sports and election betting in the state. The CFTC’s suit against Utah had no injunction motion on file as of October 27.
The stakes of the federal fight rose further on Wednesday, when 37 states, Washington D.C., the Northern Mariana Islands, the American Gaming Association and tribal gaming organizations filed amicus briefs backing Utah’s position in Kalshi’s Tenth Circuit appeal. Utah is the only state where a federal court has entered a final judgment on the merits against Kalshi, a point gaming attorney Daniel Wallach made when he called the criminal charges a raising of the appellate stakes.
No court has found any defendant guilty, and the charges are allegations only. A maximum corporate fine across all 14 counts is $270,000, against prison exposure of one to 15 years on the second-degree felony count.
