Utah prosecutors have filed a 14‑count criminal complaint against Kalshi and its co‑founders, CEO Tarek Mansour and COO Luana Lopes Lara, accusing them of illegally promoting gambling in the state. The indictment includes one second‑degree felony for a pattern of unlawful activity, twelve third‑degree felonies for online gambling promotion—one for each of the twelve wagers placed by an undercover state agent—and a class A misdemeanor for general gambling promotion, according to the charging documents filed in Salt Lake City.

Undercover Agent’s Bets Trigger Charges

A special agent with the Utah State Bureau of Investigation opened a Kalshi account on September 13 using a fabricated identity, a Utah phone number, and a local debit card. After confirming his location through Kalshi’s geolocation check, the agent placed twelve sports bets between September 13 and September 24 on NFL, MLB, NHL, MLS and college football events. Each wager ranged from $4 to $30, and Kalshi collected a fee of three to 78 cents per trade, which prosecutors allege constitute proceeds of illegal gambling.

The criminal filing follows a civil lawsuit Utah filed on October 20 seeking to block Kalshi’s sports, election and other contracts in the state. A federal judge in August ruled that Utah’s gambling statutes apply to Kalshi’s sports contracts, and an appeals court denied the platform’s request for an injunction in September. On the same day as the criminal charges, the Commodity Futures Trading Commission and the Justice Department sued Utah to prevent the state from enforcing its gambling laws against CFTC‑registered exchanges, a move reported by Decrypt. The broader dispute involves multiple states and conflicting appellate decisions on whether federal law shields prediction‑market platforms from state gambling regulations, a question that New Jersey has asked the U.S. Supreme Court to resolve.

Kalshi’s Response and Next Steps

Kalshi’s spokesperson called the Utah indictment “a crazy overreach” and said the company will fight the case in court, echoing a similar strategy used in Arizona where a federal judge temporarily blocked state prosecution. The platform, valued at $40 billion after a recent $1 billion funding round, is appealing the August district‑court decision to the Tenth Circuit, which denied a stay in September. The criminal case has no assigned judge yet, and the company faces potential prison terms of up to 15 years for the second‑degree felony and up to five years for each third‑degree felony if convicted.

What to Watch Next

Key developments to monitor include the outcome of Kalshi’s appeal to the Tenth Circuit, any further federal motions by the CFTC to block Utah’s enforcement, and whether the Supreme Court will take up the broader preemption question after New Jersey’s petition. Additional state actions—such as Michigan’s recent agreement with Polymarket U.S. to cease new sports contracts—suggest the legal landscape for prediction markets remains highly fluid.