Utah Files Criminal Charges Against Prediction Market Kalshi and Its Two Co-Founders for Illegally Promoting Gambling

Author: Omkar Godbole

Compiled by TechFlow

TechFlow Editor's Note:Utah has escalated beyond civil litigation with criminal charges: 14 counts target Kalshi and its two co-founders, with the core evidence being that an undercover agent from the state Attorney General's Office used a local identity and debit card to place 12 sports bets on the platform. The jurisdictional dispute between state gambling licenses and federal derivatives regulation (CFTC) has intensified, and decentralized platforms such as Polymarket have also been targeted by states on similar grounds.

Utah has filed criminal charges against prediction market platform Kalshi and its two co-founders, accusing the company of illegally promoting gambling in the state.

Prosecutors have brought 14 charges against KalshiEX LLC and founders Tarek Mansour and Luana Lopes Lara, including one felony count alleging a pattern of unlawful activity, 12 counts of promoting online gambling, and one misdemeanor gambling charge.

CoinDesk reached out to Kalshi for comment but had not received a response by press time.

The case relies on evidence collected in September by an undercover agent from the Utah Attorney General's Office: the agent used a local address, phone number, and debit card to access the platform.

Kalshi allegedly allowed the agent to place 12 different sports bets. The state contends that these transactions show the platform was actively promoting illegal gambling within its borders.

Kalshi is a federally regulated U.S. exchange that allows users to bet on event contracts tied to binary real-world events such as elections, sports outcomes, economic data releases, and weather patterns.

Serial Strikes

The latest move comes days after the Utah Attorney General filed a civil lawsuit against Kalshi. The suit seeks to block the company from accepting bets from Utah residents and recover profits it allegedly earned in the state.

In other words, Utah is simultaneously using the civil and criminal court systems to deliver a textbook legal one-two punch against Kalshi.

Kalshi has previously argued that sports bets traded on its platform are not gambling but a category of financial derivatives regulated at the federal level by the Commodity Futures Trading Commission (CFTC), and therefore should not fall under state oversight.

But Utah and several other states argue that prediction markets like Kalshi should be subject to state gambling laws and gambling taxes.

Legal Landscape in Turmoil

Utah is not alone in taking action. Several states, including Arizona, Connecticut, Massachusetts, Michigan, and Nevada, have chosen to bring criminal charges, take civil action, or restrict access to the platform within their jurisdictions.

Meanwhile, the Commodity Futures Trading Commission has also entered the fight, suing Utah and arguing that only Washington has the authority to regulate these contracts.

Broader in scope, the crackdown on prediction platforms extends well beyond Kalshi. States have also targeted decentralized crypto gambling giants such as Polymarket with similar state-level gambling allegations.

Source: TechFlow