Salt Lake City, Utah: Utah Charges Kalshi and Its Founders With 14 Criminal Counts Over Sports Bets

Utah Attorney General Derek Brown filed criminal charges on Wednesday, October 28, in state court in Salt Lake City against the prediction market operator Kalshi and its two co-founders, accusing the company of illegally promoting gambling in a state where gambling is banned.

The filing names KalshiEX LLC, chief executive Tarek Mansour and chief operating officer Luana Lopes Lara. Prosecutors brought 14 counts in all: one count of pattern of unlawful activity, a second degree felony; 12 counts of online gambling promotion, each a third degree felony; and one count of gambling promotion, a class A misdemeanor, Reuters reported. The defendants were summoned to appear in court rather than arrested, and the charges are allegations that no court has decided.

Twelve bets placed by an undercover agent

The case rests on an investigation run by the attorney general's office in September. Special Agent Scott Eggerman opened a Kalshi account under an undercover name on September 13, using a Utah phone number, bank account and debit card, according to the charging account reported by Reason and the Deseret News. Over about two weeks he placed 12 wagers on sports events, among them NFL and MLB games, a local college football game and a Major League Soccer match involving Real Salt Lake. The wagers totaled $114.87, and Kalshi took fees of a few cents on each one.

Brown said the platform kept taking bets from Utah even after a federal judge ruled in August that Utah's gambling laws apply to Kalshi. United States District Judge Robert J. Shelby found that federal law did not block Utah from enforcing its anti-gambling laws against the company, and on September 8 the Tenth Circuit denied Kalshi's emergency request to pause that ruling while it appeals.

"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 does not change what it is, and being federally registered does not put a company above the law."

The criminal case follows a civil suit, and a federal counter suit

The charges are the second legal move Brown's office made against Kalshi in eight days. On October 20 the state filed a civil lawsuit in the same Salt Lake County court against Kalshi and two Susquehanna trading firms, asking the court to shut down its operations in Utah, block it by geolocation and order it to give up profits the state says it made here.

One day before the criminal filing, the Commodity Futures Trading Commission sued Utah in federal court to stop the state from enforcing its gambling laws against federally registered exchanges such as Kalshi. The company says its sports contracts are regulated derivatives, not bets, and that federal oversight leaves no room for a state veto.

Kalshi rejected the charges. "This is a crazy overreach; Utah is clearly playing politics," the company said in a statement reported by Reuters and the Deseret News. "We look forward to putting a stop to this in court, just like we did in Arizona." A spokesperson told the Deseret News that no single state should have a veto over a national derivatives market overseen by the federal regulator.

Utah is the second state to bring criminal charges against Kalshi. Arizona filed criminal charges in March, the first prosecution of its kind against a federally registered prediction market, and a federal judge later blocked that case for a time. Utah and Hawaii are the only states with no legal gambling at all, which is why a filing in Salt Lake City carries weight beyond one platform: if the charges hold, every prediction market selling sports contracts into a state that bans gambling faces the same exposure.