Utah Files Criminal Charges Against Kalshi, Alleging Promotion of Illegal Gambling
Key Facts
Utah Attorney General filed criminal charges on October 28, 2026, against KalshiEx LLC and its co-founders, Tarek Mansour and Luana Lopes Lara, accusing the company of promoting gambling and allowing an undercover investigator to wager on sporting events through its platform. The indictment includes one count of engaging in a pattern of unlawful activity, 12 counts of promoting online gambling and one count of general gambling promotion. Reuters said the last charge is a misdemeanor, while the other charges fall into the second- and third-degree felony categories. The case puts the company and its executives on a state-level criminal track as Utah and federal authorities dispute who has the power to regulate prediction-market contracts. The defendants were summoned to appear in court, according to Reuters.
Charging documents say an undercover investigator placed bets on sporting events through the platform. The documents list 12 instances in which Kalshi allowed the investigator to wager during September 2026, involving football, baseball and other sports. The state links these instances to its characterization of the platform’s sports contracts as gambling subject to its laws. According to the announced charges, the criminal case centers on the platform’s promotion of gambling and making these wagers available, alongside the unlawful-activity-pattern charge. These remain allegations that have not been resolved in court.
Kalshi rejected the charges, and a company spokesperson called the action “an outrageous overreach,” adding that “Utah is clearly playing politics.” The spokesperson said the company “looks forward to stopping this in court, just as we did in Arizona.” Arizona charged Kalshi in March 2026, and a federal judge paused the case in April. The Arizona charging document included 20 counts and accused the company of accepting wagers on political outcomes, college sports competitions and individual players’ performance. The Utah case is the platform’s second state-level criminal prosecution, according to information about the two cases.
The state previously won a court ruling in the dispute over sports contracts: in August, a federal judge ruled that Utah’s anti-gambling laws apply to Kalshi’s sports contracts and denied the company’s request to bar the state from enforcing those laws. But the fight had expanded to the question of federal jurisdiction before the criminal charges were announced. On October 27, 2026, the U.S. Commodity Futures Trading Commission said it had sued Utah to prevent it from using state laws to shut down contract markets registered with the agency. The commission said Congress had given it exclusive federal responsibility for overseeing these markets, and that it had begun legal proceedings against 9 other states. The federal lawsuit came a day before Utah announced the criminal charges.
The dispute extends to a broader question of whether prediction-market contracts are subject to federal regulation as financial contracts or to state laws governing gambling. Utah says its anti-gambling laws cover Kalshi’s sports contracts, a position supported by the federal ruling in this case in August. The Commodity Futures Trading Commission, meanwhile, asserts federal jurisdiction over markets registered with it and is taking legal action to prevent states from shutting them down under local laws. Reuters said appeals courts are divided on the jurisdictional question and that the U.S. Supreme Court has been asked to resolve it. Litigation by the state and parallel federal proceedings remain ongoing.