Utah files felony charges against Kalshi and its two founders over prediction markets

Utah filed criminal charges against prediction market operator Kalshi and two of its executives, months after a federal judge rejected the company's effort to stop Utah from enforcing its anti-gambling laws ¹².

The charges include 13 counts of violating the state's prohibition on gambling and another charge involving profiting off illegal activity ¹². The charging documents name Kalshi and its co-founders, chief executive officer Tarek Mansour and chief operating officer Luana Lopes Lara ¹².

The attorney general's office did not immediately say what criminal penalties it would seek, although the felony charges carry the possibility of jail time ¹².

What Utah says

Utah Attorney General Derek Brown said Kalshi has kept operating in the state despite a federal court ruling that Utah's gambling laws apply to the company ¹².

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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 pushed back in its own statement, calling the charges a "crazy overreach" and saying that "Utah is clearly playing politics" ¹².

We look forward to putting a stop to this in court, just like we did in Arizona.

A fight spread across about 20 states

Utah has been on the front lines of a battle between states and the federal government over who regulates the markets ¹². Litigation has spread across roughly 20 states, creating a fragmented legal landscape that analysts say will likely be settled by the U.S. Supreme Court ¹².

Kalshi has maintained that prediction markets fall exclusively under federal jurisdiction and are not governed by state gambling laws ¹². Under President Donald Trump, the Commodity Futures Trading Commission, the federal agency responsible for regulating financial markets, has agreed and even sued at least 10 states, including Utah this week, to try to stop states from regulating prediction markets ¹².

Arizona earlier this year became the first state to file criminal charges against Kalshi, accusing it of operating an illegal gambling business within its borders ¹². But legal analyst Daniel 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 it fights the state's effort to shut it down ¹².

Wallach, a lawyer who specializes in sports wagering and gaming law and teaches at the University of Miami School of Law, said Utah's pursuit of felony charges represents a potential shift in strategy by states that have primarily pursued civil actions against prediction market operators ¹². He said Utah's criminal charges "could be a bellwether for how other states approach Kalshi and Polymarket" following Nevada's appellate court victory ¹².

What happens next

Kalshi sued Utah in February, asking a federal judge to prevent the state from enforcing its gambling restrictions on the platform ¹². The lawsuit came as Utah was on the verge of enacting legislation intended to undercut prediction markets from doing business in the state ¹².

A federal judge rejected the request, saying the federal law that Kalshi cited in its argument, the Commodity Exchange Act, doesn't prevent the state from enforcing its laws ¹². The 10th U.S. Circuit Court of Appeals in Denver last month declined to halt Utah's regulatory enforcement during Kalshi's appeal ¹².

Last week, Utah also sued Kalshi and several related companies, asking a state 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 it ¹². The attorney general's office also asked the court to make the defendants give up the profits they made in Utah ¹².

That matters because the case lands just before the Nov. 3 midterm election, with prediction markets among the platforms offering odds on races ¹². The pattern is a widening split: federal regulators say they alone can police these markets, while states are now trying criminal charges, not just civil suits, to shut them down ¹².

The Record

1. Feb 1, 2026Kalshi sued Utah, asking a federal judge to block the state from enforcing its gambling restrictions ¹².
2. Oct 21, 2026Utah sued Kalshi and related companies in state court, seeking to stop trading on sports, elections and politics and to force a geolocation provider ¹².
3. Oct 28, 2026Utah filed 13 gambling counts and one profiting count against Kalshi, Tarek Mansour and Luana Lopes Lara ¹².

Sources

1. ABC News, “Kalshi, founders charged, escalating fight over who can regulate prediction markets” (2026-10-29). abcnews.com/US/wireStory/utah-charges-kalshi-founders-escala
2. The Seattle Times, “Utah charges Kalshi and its founders, escalating a fight over who can regulate prediction markets | The Seattle Times” (2026-10-28). seattletimes.com/business/utah-charges-kalshi-and-its-founde

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