Utah prosecutors filed felony criminal charges on Wednesday against prediction market platform Kalshi and its two top executives, escalating a nationwide clash over whether states or federal regulators control event wagering.
The criminal filing came just after the Commodity Futures Trading Commission filed a federal lawsuit against Utah to halt state enforcement efforts against the exchange. The dueling legal actions mark a sharp escalation in a jurisdictional conflict that legal experts say is bound for the U.S. Supreme Court.
Felony Counts Filed Against Co-Founders
The state charging documents name Kalshi alongside Chief Executive Officer Tarek Mansour and Chief Operating Officer Luana Lopes Lara. The filing includes 13 counts of violating Utah’s ban on gambling and one count of profiting from unlawful activity, according to reports by The Guardian and ABC News. While Utah officials did not specify the penalties they plan to seek, the felony counts carry potential prison time.
Utah Attorney General Derek Brown said in a statement that Kalshi continued running in the state despite an earlier federal court decision finding that local anti-gambling statutes apply to the company. “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,” Brown said.
Kalshi pushed back against the state’s move. In a company statement reported by ABC News, the firm called the charges a “crazy overreach” and claimed “Utah is clearly playing politics,” adding that it intends to defeat the prosecution in court.
Federal Regulators Claim Exclusive Authority
Under the Trump administration, the CFTC has argued that prediction markets offer regulated financial swaps covered by the Commodity Exchange Act rather than unlawful wagers. The federal agency sued Utah in federal court earlier in the week, seeking an injunction to stop the state from investigating or prosecuting CFTC-regulated entities, according to The Salt Lake Tribune.
“Utah seeks to shut down prediction markets across a wide variety of markets,” CFTC Chair Michael S. Selig said in a statement. He emphasized that federal law gave the CFTC exclusive jurisdiction over commodity derivatives and that event contracts provide both hedging tools and valuable public information.
Utah previously filed a civil complaint against Kalshi last week in 3rd District Court, seeking to force the company to surrender its local profits and block access to Utah residents. Utah officials, including Gov. Spencer Cox, argued that event contracts speculating on elections, sports and weather operate as thinly disguised illegal bets.
Nationwide Fight Over Prediction Platforms
The legal confrontation in Utah follows an earlier push by Arizona, which filed misdemeanor gambling charges against Kalshi earlier this year. However, Utah’s choice to bring felony charges signals a more aggressive tactic that could influence other jurisdictions, sports gaming legal specialist Daniel Wallach told ABC News.
Kalshi had tried in February to win a federal court order barring Utah from enforcing its gambling prohibitions. A federal judge rejected that plea, ruling that the Commodity Exchange Act did not stop the state from enforcing local restrictions, and the 10th U.S. Circuit Court of Appeals declined to pause enforcement pending an appeal.
The CFTC has filed lawsuits against at least 10 states over attempts to regulate prediction exchanges, while more than 40 state attorneys general have opposed federal rules that permit widespread operations. With related lawsuits pending across four federal appeals circuits, legal analysts expect the U.S. Supreme Court will ultimately decide whether federal commodities regulations preempt state gambling bans.
