Utah filed 14 criminal charges, 13 felonies and one misdemeanor, against prediction-market exchange KalshiEX LLC and its co-founders, CEO Tarek Mansour and COO Luana Lopes Lara, on Wednesday, October 28.
The charging filing from Utah Attorney General Derek Brown alleges one second-degree felony count of engaging in a pattern of unlawful activity, twelve third-degree felony counts of online gambling promotion, and one misdemeanor gambling promotion count. The case rests on an undercover state agent who placed 12 sports wagers totaling $114.87 on the platform between September 13 and September 26, prosecutors say.
Founders personally named
Mansour and Lopes Lara, who co-founded the exchange in 2018, were issued court summonses rather than arrest warrants and will answer the charges in Utah’s Third District Court in Salt Lake County. The pattern count cites public statements the founders have made about their direct control of the business, and the filing alleges Kalshi collected revenue from unlawful gambling activity and reinvested the proceeds into operations. The charges carry possible jail time, though the attorney general’s office has not specified what penalties it will seek. The charges are allegations and have not been proven in court.
“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,” Brown said in a statement.
What it means for exchange executives
The case puts the executives of a federally registered exchange personally before a state criminal court. Kalshi has been a CFTC-designated contract market since 2020, and it has long argued its sports contracts are financial derivatives, not gambling. A spokesperson called the prosecution “a crazy overreach” and said Utah is “clearly playing politics,” pointing to Arizona, which brought criminal charges against Kalshi in March before a federal judge blocked the prosecution; Arizona has appealed.
Kalshi has already lost a round in federal court in Utah. US District Judge Robert Shelby ruled on August 4 that federal commodities law does not prevent the state from enforcing its gambling statutes against Kalshi, and the Tenth Circuit denied the exchange emergency protection on appeal September 8. The CFTC sued Utah days before the charges were filed, seeking to block state enforcement against federally regulated prediction markets, its tenth such suit against a state, and a coalition of 37 state attorneys general backed Utah’s regulatory authority in a brief filed October 29.
Kalshi’s response to New Jersey’s Supreme Court petition on the same federal-versus-state question is due November 9.
