Utah filed criminal charges on Wednesday against prediction market operator Kalshi and two of its co-founders, chief executive Tarek Mansour and chief operating officer Luana Lopes Lara, months after a federal judge rejected the company's bid to block the state's strict anti-gambling laws from applying to its business.
Utah's charging documents include 13 counts of violating the state's prohibition on gambling and a further charge involving profiting off illegal activity.
Utah has been on the front lines of the battle between states and the federal government over who regulates the markets. Litigation has spread across roughly 20 states, creating a fragmented legal landscape that analysts say will likely be settled by the high court. Kalshi has maintained that prediction markets fall exclusively under federal jurisdiction and are not governed by state gambling laws.
Utah attorney general Derek Brown said Kalshi had continued to operate in Utah despite a federal court ruling that the state's gambling laws apply to the company. "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. His office did not immediately say what criminal penalties it would seek, although the felony charges carry the possibility of jail time.
Kalshi called the charges a "crazy overreach" and said that "Utah is clearly playing politics." "We look forward to putting a stop to this in court, just like we did in Arizona," the company said.
Analysis
Why This Matters
- The criminal charges raise the stakes in an unresolved question: whether states can police prediction markets or whether federal regulation is exclusive, a dispute now being litigated in roughly 20 states.
- If the charges succeed, they could become a template for other states seeking to restrict or bar prediction markets, shifting enforcement from civil action to prosecution.
- Kalshi's co-founders personally face felony charges carrying the possibility of jail time, not just fines or injunctions against the company.
Background
Prediction markets allow people to wager on the outcome of future events. Kalshi has argued that this activity is regulated exclusively at the federal level, while Utah, a state where gambling is broadly illegal, treats it as gambling regardless of what it is called. A federal judge has already ruled that Utah's gambling laws apply to Kalshi, and the wider dispute appears headed to the US supreme court.
Key Perspectives
Utah Attorney General Derek Brown: says gambling is illegal in Utah whether someone places the bet, runs the game or promotes it, and that calling the activity a prediction market or being federally registered does not put a company above the law.
Kalshi: calls the charges a "crazy overreach" and says Utah is "clearly playing politics"; it argues prediction markets fall exclusively under federal jurisdiction and says it looks forward to stopping the charges in court, as it did in Arizona.
What to Watch
- Whether any of the other states with litigation pending follow Utah in bringing criminal charges rather than civil actions.
- The progress of Kalshi's court challenge to the charges in Utah, which the company says it will move to stop.
- Any sign of the litigation reaching the US supreme court, which analysts expect to settle who regulates prediction markets.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedBrown said: “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.”Business | The Guardian: ““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.”
- SupportedKalshi called the charges a “crazy overreach”.Business | The Guardian: “In a statement, Kalshi called the charges a “crazy overreach””
- SupportedKalshi said: “Utah is clearly playing politics.”Business | The Guardian: “and said that “Utah is clearly playing politics”.”
- SupportedKalshi said: “We look forward to putting a stop to this in court, just like we did in Arizona.”Business | The Guardian: ““We look forward to putting a stop to this in court, just like we did in Arizona,” it said.”
- SupportedUtah filed criminal charges on Wednesday against Kalshi and co-founders Tarek Mansour and Luana Lopes Lara.Business | The Guardian: “Utah on Wednesday filed criminal charges against prediction market operator Kalshi and two of its executives, months after a federal judge rejected Kalshi’s effort to prevent Utah from enforcing its strict anti-gambling laws against the activity. The state’s charging documents name Kalshi and its co-founders, chief executive officer Tarek Mansour and chief operating officer Luana Lopes Lara.”
- SupportedThe charges came months after a federal judge rejected Kalshi’s effort to block Utah’s gambling laws from applying to its business.Business | The Guardian: “months after a federal judge rejected Kalshi’s effort to prevent Utah from enforcing its strict anti-gambling laws against the activity.”
- SupportedThe charges include 13 counts of violating Utah’s prohibition on gambling and another charge involving profiting off illegal activity.Business | The Guardian: “The charges include 13 counts of violating the state’s prohibition on gambling and another charge involving profiting off illegal activity.”
- SupportedThe charges could mark a new tactic in the fight over regulatory authority.Business | The Guardian: “The felony charges could represent a new tactic in how states try to assert regulatory authority over the fast-expanding activity”
- SupportedLitigation has spread across roughly 20 states.Business | The Guardian: “Litigation has spread across roughly 20 states, creating a fragmented legal landscape”
- SupportedAnalysts say the fragmented legal landscape will likely be settled by the US Supreme Court.Business | The Guardian: “creating a fragmented legal landscape that analysts say will likely be settled by the supreme court.”
- SupportedKalshi maintains that prediction markets fall exclusively under federal jurisdiction and are not governed by state gambling laws.Business | The Guardian: “Kalshi has maintained that prediction markets fall exclusively under federal jurisdiction and are not governed by state gambling laws.”
- SupportedThe attorney general’s office did not immediately say what criminal penalties it would seek, although the felony charges carry the possibility of jail time.Business | The Guardian: “The attorney general’s office did not immediately say what sort of criminal penalties it would seek in the case, although the felony charges carry the possibility of jail time.”