Utah Attorney General Derek Brown Files 14 Felony Charges Against Kalshi Founders

Utah Attorney General Derek Brown filed 14 felony charges against prediction market company Kalshi and two of its executives on Wednesday. The move targets the platform's continued operations in the state after a federal court ruled that Utah's anti-gambling laws apply to the business. The charges include 13 counts for violating the state's gambling prohibition and one count for profiting from illegal activity. The filing names Kalshi co-founders and Chief Executive Officer Tarek Mansour and Chief Operating Officer Luana Lopes Lara.

Brown stated in a release that Kalshi kept operating in Utah despite the court ruling. He noted that gambling is illegal in the state whether a person places a bet, runs the game, or promotes it. Brown argued that calling the activity a prediction market does not change its nature. He added that federal registration does not place a company above the law. The attorney general's office did not specify the criminal penalties it would seek, though the felony charges allow for jail time.

Kalshi responded by calling the charges a crazy overreach. The company said Utah is clearly playing politics in the filing. Kalshi stated it looks forward to stopping the action in court, similar to its success in Arizona. The company maintains that prediction markets fall under federal jurisdiction and are not subject to state gambling laws. The Commodity Futures Trading Commission has agreed with this view. The federal agency has sued at least 10 states to stop them from regulating prediction markets, including a suit filed against Utah this week.

The legal conflict began when Kalshi sued Utah in February. The company asked a federal judge to block the state from enforcing its gambling restrictions. At that time, Utah was preparing to pass legislation to limit prediction market activity. A federal judge rejected Kalshi's request, finding that the Commodity Exchange Act did not prevent the state from enforcing its laws. The 10th U.S. Circuit Court of Appeals in Denver declined to halt Utah's regulatory enforcement last month while Kalshi appeals.

Utah also filed a separate civil suit last week against Kalshi and related companies. The state court case asks judges to stop the platform from trading on sports, elections, politics, and culture outcomes in Utah. The attorney general's office requested that the defendants use a court-approved geolocation provider to enforce the ban. The state also asked the court to order the defendants to surrender profits earned in Utah.

This criminal filing follows a similar move in Arizona. Arizona became the first state to file criminal charges against Kalshi earlier this year. It accused the company of operating an illegal gambling business. A judge later put that case on hold. However, the 9th U.S. Circuit Court of Appeals in San Francisco recently refused to let Kalshi restart trading on sports and election events in Nevada. That decision may restore Arizona's authority to pursue its misdemeanor charges.

Daniel Wallach, a lawyer who specializes in sports wagering and gaming law at the University of Miami School of Law, said Utah's felony charges represent a shift in strategy. States have primarily pursued civil actions against prediction market operators in the past. Wallach expects more states to bring cases like Utah's. He said the action could serve as a bellwether for how other states approach Kalshi and Polymarket after the recent appellate court victory in Nevada. Litigation involving these markets has spread across roughly 20 states.