Utah Files 14 Felony Counts Against Kalshi Over Prediction Markets

Utah prosecutors filed 14 felony counts against prediction market operator Kalshi and its two co-founders on Wednesday. The charges represent the first time a state has pursued criminal penalties against the New York-based platform for operating in its jurisdiction. The move escalates a legal conflict that has spread across roughly 20 states and is expected to reach the U.S. Supreme Court.

The charging documents accuse Kalshi, Chief Executive Officer Tarek Mansour, and Chief Operating Officer Luana Lopes Lara of violating state gambling laws. Thirteen of the counts involve the state's general prohibition on gambling, while the 14th count addresses profiting from that illegal activity. Utah Attorney General Derek Brown stated that the company continued to operate in the state after a federal court ruled that Utah's laws applied to the platform.

"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." The attorney general's office has not yet specified the exact criminal penalties it seeks, though felony charges carry the possibility of jail time for the individuals named.

Kalshi rejected the charges in a statement, describing them as a "crazy overreach" and arguing that the state is "clearly playing politics." The company noted that it had successfully defended similar actions in Arizona. "We look forward to putting a stop to this in court, just like we did in Arizona," the platform said. Kalshi maintains that prediction markets fall under the exclusive jurisdiction of the federal Commodity Futures Trading Commission, rather than state gambling authorities.

The case follows a federal judge's decision to reject Kalshi's bid to block Utah's enforcement of its anti-gambling laws. In February, the company sued Utah to prevent the state from applying its restrictions, citing the Commodity Exchange Act. The judge ruled that the federal law did not stop the state from enforcing its own statutes. The 10th U.S. Circuit Court of Appeals in Denver declined last month to pause Utah's regulatory enforcement while Kalshi appeals that decision.

Legal analysts suggest Utah's criminal strategy signals a change in how states are approaching the sector. Daniel Wallach, a gaming law professor at the University of Miami School of Law, noted that states have primarily relied on civil actions until now. He expects other states to follow Utah's lead after the 9th U.S. Circuit Court of Appeals recently allowed Arizona to maintain its case against Kalshi. Wallach described the Utah charges as a potential bellwether for future litigation involving Kalshi and rival platform Polymarket.

The dispute has intensified under the current administration, with the Commodity Futures Trading Commission suing at least 10 states to stop them from regulating prediction markets. Utah joined that federal lawsuit this week. The state also filed a separate civil suit in a state court last week, seeking to stop Kalshi from trading on sports, elections, politics, and culture events in Utah and to compel the company to use a court-approved geolocation provider to enforce that ban.