Utah Files Felony Charges Against Kalshi Founders

Utah authorities filed criminal felony charges against prediction market operator Kalshi and two of its executives on Wednesday. The filing marks an escalation in the regulatory conflict between the state and the company, which continues to operate within Utah borders despite legal challenges.

The charging documents, released by the state, include 13 counts for violating Utah’s prohibition on gambling and one additional charge related to profiting from illegal activity. The defendants named in the case are Kalshi, Chief Executive Officer Tarek Mansour, and Chief Operating Officer Luana Lopes Lara. The felony classification introduces the possibility of jail time, although the attorney general's office has not yet specified the exact penalties it seeks.

Utah Attorney General Derek Brown stated that the company continued to do business in the state after a federal judge ruled that state gambling laws applied to Kalshi. Brown argued in a statement that the label of a prediction market does not alter the nature of the activity. He noted that federal registration does not exempt a company from state law, emphasizing that the act of placing a bet, running the game, or promoting it constitutes illegal gambling under state rules.

Kalshi responded to the charges by describing the move as a "crazy overreach." The company claimed Utah was "clearly playing politics" and expressed confidence in stopping the action in court, similar to its success in Arizona. Kalshi maintains that prediction markets fall exclusively under federal jurisdiction and are not subject to state gambling regulations.

This legal battle is part of a wider dispute involving roughly 20 states and the federal government. Under President Donald Trump, the Commodity Futures Trading Commission has agreed with Kalshi's position and has sued at least 10 states, including Utah this week, to limit state regulatory power over these markets. Arizona became the first state to file criminal charges against Kalshi earlier this year, though that case has since been placed on hold.

Daniel Wallach, a lawyer at the University of Miami School of Law, noted that Utah's shift to felony charges represents a strategic change from the civil actions previously pursued by other states. He suggested this approach could serve as a model for other states following a recent appellate court victory in Nevada. That 9th U.S. Circuit Court of Appeals ruling refused to let Kalshi restart trading on sports and election events in Nevada while it fights the state’s shutdown efforts.

The current legal standoff follows a February lawsuit in which Kalshi asked a federal judge to block Utah's enforcement of its gambling restrictions. The judge denied the request, ruling that the Commodity Exchange Act does not prevent the state from enforcing its laws. The 10th U.S. Circuit Court of Appeals in Denver also declined to halt Utah's enforcement during the appeal process last month. Last week, Utah filed a separate civil suit in state court to stop the platform from trading on various outcomes and to require the use of a court-approved geolocation provider.