Utah has launched a criminal prosecution against Kalshi, the prediction market platform, and two of its senior leaders, accusing them of running an illegal gambling operation within the state. The charges, filed in state court, target CEO Tarek Mansour and COO Luana Lopes Lara, who together face 13 felony counts and one misdemeanor count, according to court documents.
Attorney General Derek Brown, a Republican, framed the case as a straightforward enforcement of Utah's strict anti-gambling laws. "Gambling is illegal in Utah, whether you place the bet, run the game, or promote it," Brown said in a statement. "Calling it a 'prediction market' doesn't change what it is, and being federally registered doesn't put a company above the law." He added that a federal court had already ruled that Utah's gambling laws apply to Kalshi, yet the company "kept taking bets from Utahns anyway."
The charges stem from an undercover operation in which a state law enforcement officer, posing as a Utah resident, placed a series of wagers on sporting events through Kalshi between September 13 and September 24. The officer used a Utah address, phone number, and bank account, and his geolocation and IP address confirmed he was in the state. The filing alleges that Kalshi "derived proceeds from multiple episodes of online gambling promotion" through fees charged on each wager, and that the company "used or invested those proceeds" in its operations.
This is not the first legal clash between Utah and Kalshi. In February, Kalshi sued the state to block enforcement of its anti-gambling laws, but a federal judge ruled in August that federal law does not preempt state action. That ruling cleared the way for the current criminal case.
The dispute is part of a broader national fight over whether prediction markets fall under state or federal jurisdiction. Kalshi and other platforms argue they are regulated by the Commodity Futures Trading Commission (CFTC) and offer a distinct financial product, not gambling. But several states have pushed back, and the legal landscape remains unsettled. Last month, New Jersey asked the Supreme Court to resolve the conflicting appellate rulings, a move that could have major implications for the industry.
Kalshi has vowed to fight the Utah charges, calling the prosecution "a crazy overreach" and accusing the state of "playing politics." A spokesperson noted that the company had successfully defended itself against similar charges in Arizona, where a judge blocked the case in April. "We look forward to putting a stop to this in court, just like we did in Arizona," the spokesperson said.
Legal experts say the outcome of these cases could shape the future of prediction markets, which have grown in popularity as a way to bet on elections, sports, and other events. The CFTC has also weighed in, suing Utah over its attempt to ban the platforms, a sign of the federal-state tension.
For now, Utah's aggressive stance signals that states are willing to use criminal law to challenge the industry's expansion. As the legal battles continue, the Supreme Court may ultimately have the final say on whether prediction markets are a form of gambling or a legitimate financial instrument.
