Utah Charges Kalshi With 12 Counts of Promoting Online Gambling
Key Facts
Utah filed an indictment on October 28 charging prediction platform Kalshi and its founders with 12 counts of third-degree promoting online gambling, escalating a legal dispute over prediction markets. The indictment also includes one second-degree felony count related to a pattern of unlawful activity and one misdemeanor count of general promotion of gambling. The state says the platform’s activity is subject to its laws prohibiting gambling. The charges have not been adjudicated in the available information. The case pits state-level rules governing these markets against the position of the federal regulator.
The charging documents name Kalshi and its co-founders in executive management: CEO Tarek Mansour and Chief Operating Officer Luana Lopes Lara. The Associated Press said the documents name them in the case but did not report that arrest warrants had been issued for them. According to charging records cited by The Salt Lake Tribune, the investigation was based on 12 sports bets that the state said an undercover agent with the attorney general’s office placed on the platform. The bets remain allegations in the charging file, not facts adjudicated by a court. This part of the case links the nature of the contracts available on the platform to the state’s definition of gambling.
Kalshi rejected the charges, calling them an “unreasonable overreach,” and said it would challenge them in court. It added that “Utah is clearly playing politics.” Utah Attorney General Derek Brown, meanwhile, said federal registration does not put the company above the law. The dispute reflects a difference over which authority has the power to regulate event contracts, not merely a disagreement over enforcement of state law. The state says its gambling laws apply to the platform’s activity, while Kalshi maintains its legal position rejecting the charges.
On October 27, the U.S. Commodity Futures Trading Commission announced that it had filed a lawsuit against Utah to prevent it from using state laws to shut down contract markets registered with the agency. The commission said Congress had entrusted it with exclusive federal responsibility for overseeing these markets. Its chairman, Michael Selig, said event contracts serve not only hedging and investment, but also provide the public with information about the outcomes of future events. The case therefore sets the state’s claim to enforce gambling laws against the commission’s position that oversight of registered markets falls under its federal remit. Utah had previously cited an August federal ruling that said federal law did not prevent it from enforcing its laws against the company.
The dispute extends to other states: the commission said it had initiated legal proceedings against 9 other states in addition to Utah, and filed briefs in 4 federal courts of appeals and one state supreme court. The Associated Press estimated that litigation over prediction markets had spread to about 20 states, creating a varied legal landscape. The agency said analysts expect the U.S. Supreme Court to ultimately resolve that landscape. Utah’s attorney general’s office did not immediately announce the criminal penalties it would seek in the case. Felony charges carry the possibility of prison, according to the agency.