Utah Files 14 Criminal Charges Against Kalshi and Its Two Founders

Utah has moved from civil litigation to criminal prosecution of the prediction market Kalshi. Attorney General Derek Brown filed 14 charges on Wednesday, October 28, against Kalshi, CEO Tarek Mansour and Luana Lopes Lara, accusing them of illegally promoting online gambling and letting an undercover agent place wagers.

According to the charging documents, the counts include 13 felonies and one class A misdemeanor. Each of 12 transactions underlies a third-degree felony count of online gambling promotion, and a second-degree felony count alleges a pattern of unlawful activity. Reports describe Lopes Lara variously as co-founder and as chief operating officer.

The undercover purchases

The case rests on an investigation by Scott Eggerman of the Utah Attorney General's Office. He opened a Kalshi account on September 13 using a Utah address, phone number and debit card, after geolocation confirmed his position. He then placed 12 sports wagers totaling $114.87 across NFL, college football, baseball, soccer and hockey, and lost a net $25.10.

One bet was $5 on Utah beating Utah State by more than 27.5 points on September 19. Utah won by 36, and Eggerman reportedly profited $4.13. Prosecutors allege Kalshi collected fees of 3 to 78 cents per trade.

Mansour and Lopes Lara were issued court summonses rather than arrest warrants. They are expected to respond in Utah's Third District Court in Salt Lake County.

"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,"

Derek Brown, Utah Attorney General

Brown said the platform kept accepting sports wagers after a federal court ruled Utah could enforce its gambling laws against Kalshi. Kalshi called the prosecution a "crazy overreach" in a statement reported by the Deseret News, described it as a political dispute and said it expects to defeat the charges.

A stack of overlapping fights

The charges land one week after Utah's October 20 civil complaint against Kalshi and two Susquehanna trading firms. That suit seeks $30.6 million to $61.2 million in allegedly unlawful fees across more than three billion wagers tied to Utah accounts through October 19, plus restitution and access restrictions.

The federal side is pushing back. On Tuesday, October 27, the CFTC sued Utah, arguing federal law gives it exclusive jurisdiction and asking the federal court to block enforcement of state gambling law against CFTC-regulated exchanges. CFTC Chair Michael Selig said in the agency's statement:

"Congress entrusted the CFTC to be the federal regulator with sole responsibility to oversee these markets,"

Michael Selig, CFTC Chair

The CFTC has now sued at least 10 states, according to reports.

Court record so far

The courts have not favored Kalshi in Utah. Judge Robert Shelby ruled on August 4 that federal commodities law did not prevent Utah enforcement, and the Tenth Circuit denied Kalshi emergency relief on September 8 while the appeal is pending.

What it means

Criminal exposure for named executives raises the stakes beyond fees and injunctions. A civil suit can end in a payment; a summons to answer felony counts puts the people running the exchange personally in the dock. Arizona tried this route first, filing criminal charges against Kalshi in March, but a federal judge blocked that prosecution and the state appealed. New Jersey has petitioned the Supreme Court, with Kalshi's response due November 9.

The split is also visible in sports. The NBA recently signed an information-sharing MOU with the CFTC naming Kalshi and Polymarket as preferred exchanges, while the NFL backs states at the Supreme Court. Whether a federally registered exchange can be prosecuted under state gambling law is now being tested through civil, criminal and federal jurisdiction cases at once.