Federal judge rejected Kalshi’s Utah enforcement challenge
Utah filed criminal charges Wednesday against prediction-market operator Kalshi and co-founders Tarek Mansour and Luana Lopes Lara. The state’s charging documents name Mansour as chief executive officer and Lopes Lara as chief operating officer, and include 13 counts of violating Utah’s prohibition on gambling and another charge involving profiting off illegal activity.
The felony charges carry the possibility of jail time, but the attorney general’s office did not immediately say what criminal penalties it would seek in the case.
In a statement, Utah Attorney General Derek Brown said Kalshi had continued operating in Utah despite a federal court ruling that the state’s gambling laws apply to the company. Brown said, “Gambling is illegal in Utah, whether you place the bet, run the game, or promote it. Calling it a ‘prediction market’ doesn’t change what it is, and being federally registered doesn’t put a company above the law.”
Kalshi disputed Utah’s action. In a statement, the company called the charges a “crazy overreach” and said that “Utah is clearly playing politics.” Kalshi said, “We look forward to putting a stop to this in court, just like we did in Arizona.”
Kalshi sued Utah in February, asking a federal judge to prevent enforcement of the state’s gambling restrictions as Utah was on the verge of enacting legislation intended to undercut prediction markets doing business in the state. The judge rejected the request, saying the Commodity Exchange Act, the federal law Kalshi cited, does not prevent Utah from enforcing its laws. Last month, the 10th U.S. Circuit Court of Appeals in Denver declined to halt Utah’s regulatory enforcement during Kalshi’s appeal.
Utah also sued Kalshi and several related companies in state court last week. The state asked the court to stop the platform from trading on sports, elections, politics, culture and other outcomes in Utah and to use a court-approved geolocation provider to enforce the order. The attorney general’s office also asked for the defendants to give up profits made in Utah.
Kalshi maintains that prediction markets fall exclusively under federal jurisdiction and are not governed by state gambling laws. Under President Donald Trump, the Commodity Futures Trading Commission, the federal agency responsible for regulating financial markets, has sued at least 10 states, including Utah this week, to try to stop states from regulating prediction markets.
Litigation over the industry has spread across roughly 20 states, creating a fragmented legal landscape that analysts say is likely to be settled by the U.S. Supreme Court. Arizona became the first state to file criminal charges against Kalshi earlier this year, accusing it of operating an illegal gambling business within its borders. A judge later put that case on hold.
Wallach said Arizona’s authority to pursue the misdemeanor charges could soon be restored after the 9th U.S. Circuit Court of Appeals in San Francisco refused to let Kalshi restart trading on sports and elections events in Nevada while Kalshi fights the state’s effort to shut it down.
Wallach, a lawyer who specializes in sports wagering and gaming law and teaches at the University of Miami School of Law, said Utah’s use of felony charges represents a potential shift in state strategy from civil actions. He expects more states to bring similar cases and said the Utah action “could be a bellwether for how other states approach Kalshi and Polymarket” following Nevada’s appellate victory.