Utah's attorney general filed criminal charges on Wednesday, October 28, against prediction-market operator Kalshi and its two co-founders, accusing the company of illegally promoting online gambling in a state where gambling is banned — and turning a regulatory fight into a criminal case in a state court in Salt Lake County.
Source: Reuters via KTWB
The charges were filed by Utah Attorney General Derek Brown, a Republican, against KalshiEX LLC and its co-founders Tarek Mansour and Luana Lopes Lara. Reuters reported that the filing came a day after the U.S. Commodity Futures Trading Commission (CFTC) sued Utah to try to block the state from enforcing its anti-gambling laws against the company — so the state and the federal regulator are now suing and charging in opposite directions at the same time.
What the state says happened
According to the charging documents reported by crypto.news, an undercover investigator from the Attorney General's office opened an account and placed 12 sports wagers on the platform in September, using Utah credentials. The investigator's 12 wagers totalled $114.87, and the investigator lost $25.10 — small amounts that the state is using as the factual basis for the 12 online-gambling-promotion counts, one for each wager.
Brown set out the state's position in a statement quoted by Reuters: “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.”
Source: Reuters via KTWB
Kalshi's answer
Kalshi rejected the charges outright. A company spokesperson told Reuters: “This is a crazy overreach; Utah is clearly playing politics. We look forward to putting a stop to this in court, just like we did in Arizona.” Reuters noted that several states have litigated against Kalshi, but only Arizona had previously pursued a criminal case against it — and that Arizona case was later blocked by a federal judge.
Kalshi, Mansour and Lopes Lara are charged, not convicted. The counts described in this report are the state's allegations as filed on October 28, and the company denies them and says it will fight the case in court.
How the fight reached a criminal court
The criminal filing is an escalation, not the start. Last week Brown filed a civil lawsuit alleging Kalshi was allowing Utah residents to place bets on sports, elections and politics, Reuters reported. The civil case, filed on October 20 according to the case record summarised by crypto.news, seeks to block the platform in Utah and to recover between $30.5 million and $61.1 million in fees the state says Kalshi collected from Utah users between February and mid-October 2026.
The courts have already moved once in Utah's favour on the underlying question: a federal judge ruled on August 4 that Utah's gambling laws apply to Kalshi, and the Tenth Circuit denied a stay on September 8, according to the case record reported by crypto.news. The CFTC's own lawsuit against Utah, filed on October 27, argues the opposite direction — that federally registered prediction-market contracts belong under federal oversight.
Why this matters beyond Utah
Prediction markets let users put money on the outcomes of sports, elections and other events, and the industry has grown quickly while state gaming regulators and the federal CFTC dispute who gets to police it. Utah's move is the first criminal escalation of that dispute since Arizona's blocked case, and it names the company's two founders personally, not just the company — which raises the stakes from a fine a business can pay to legal jeopardy for named executives. If Utah's theory survives in court, other states with gambling bans will have a template; if a federal court blocks it, as happened in Arizona, the state-by-state approach weakens.
For readers who use event-contract or prediction apps while travelling or living across state lines, the practical point is immediate: the same trade that is treated as a federally regulated contract in one courtroom is being charged as felony gambling promotion in a Salt Lake County courtroom, and a platform's federal registration is not, in Utah's argument, a shield against state law.
What happens next
The criminal case now proceeds in state court in Salt Lake County, while the CFTC's federal lawsuit against Utah and the state's civil case against Kalshi run in parallel. No verdict or plea has been reported, and no court date was given in Wednesday's reporting. Kalshi says it will ask the courts to stop the case, citing Arizona; Utah's attorney general says the state will enforce its gambling ban as written.