Utah Files Criminal Charges Against Prediction Market Company Kalshi

Utah's top law officer has filed criminal charges against a company called Kalshi and two of its leaders. The state says Kalshi broke the law by letting people in Utah bet money on sports and other events online. The charges were announced on October 28 by Utah Attorney General Derek Brown. This is one of the most serious legal actions any state has taken against a prediction market company.

Kalshi is what's known as a 'prediction market' company. That means people pay money to guess whether something will happen — like who will win a football game or an election. Utah says that no matter what you call it, letting people bet money on outcomes is gambling. And gambling is against the law in Utah.

Attorney General Brown filed the charges against Kalshi and its two co-founders, Tarek Mansour and Luana Lopes Lara. He said that being registered with the federal government doesn't put a company above state law. Brown said, 'Calling it a prediction market doesn't change what it is, and being federally registered doesn't put a company above the law.' He made clear that anyone who places a bet, runs a game, or promotes gambling can be charged.

The charges include some serious crimes. Kalshi faces one count of a 'pattern of unlawful activity,' which is a second-degree felony. It also faces 12 counts of promoting online gambling, a third-degree felony, and one count of general gambling promotion, which is a misdemeanor. These charges were filed in a state court in Salt Lake County.

Court papers say an undercover government agent was allowed to place bets on football, baseball, and other sports through Kalshi's app 12 different times in September. This happened even after a federal judge ruled in August that Utah could enforce its gambling laws against Kalshi. Utah says this shows the company ignored the court's earlier decision. That made the state push for stronger action.

Kalshi strongly disagrees with the charges. A spokesperson for the company called the move 'a crazy overreach' and said Utah was 'playing politics.' The company said it plans to fight the charges in court, just like it fought a similar criminal case in Arizona. In Arizona, a federal judge blocked those charges, which Kalshi sees as a win.

This legal fight is part of a bigger battle happening across the country. A federal agency called the Commodity Futures Trading Commission, or CFTC, actually sued Utah the day before these charges were filed, trying to stop the state from using its gambling laws against Kalshi. The CFTC believes it — not the states — should be the one to regulate prediction markets. Several other states have also sued Kalshi over its platform.

The question of who gets to regulate prediction markets has divided different courts across the country. The issue may end up before the U.S. Supreme Court, which has been asked to decide. For now, Utah and Kalshi are headed toward a courtroom battle. The result could affect how prediction market companies are allowed to operate all across the United States.