Utah Charges Kalshi and Its Founders Over Alleged Illegal Gambling

Utah Charges Kalshi Over Alleged Illegal Online Gambling

Prediction market news turned serious on October 28, 2026. Utah charges Kalshi, the prediction market platform, along with CEO Tarek Mansour and COO Luana Lopes Lara. The state accuses them of promoting illegal online gambling.

Attorney General Derek Brown filed the case in Utah’s Third Judicial District Court in Salt Lake County. It comes a week after his office filed a civil lawsuit and a day after the CFTC sued Utah. The Block also reported the move on X.

Source: The Block X-Post

What the Criminal Charges Against Kalshi Include

Utah charges Kalshi and both executives with 14 counts in total:

• One count of a pattern of unlawful activity, a second-degree felony

• 12 counts of online gambling promotion, each a third-degree felony

• One count of general gambling promotion, a misdemeanor

Prosecutors built the case on an undercover test. Special Agent Scott Eggerman of the Utah AG’s office opened an account and placed bets on NFL, NCAA, MLS, MLB, and NHL games between September 13 and 26, 2026. He was in Utah each time.

According to the charging documents, the platform handled the wagers and collected fees even after he confirmed his Utah location.

Brown said in a statement that online gambling is illegal in Utah whether someone places the bet, runs the game, or promotes it. He added that calling it a “prediction market” doesn’t change what it is. He also said federal registration does not put a company above the law.

How the Utah Dispute Moved From Civil Court to Criminal Court

Kalshi started the legal fight. It sued Utah officials in February 2026 and argued that the Commodity Exchange Act stops the state from regulating its platform.

In August, U.S. District Judge Robert Shelby ruled for Utah and held that federal law does not override its gambling laws. The Tenth Circuit denied Kalshi’s request to pause enforcement on September 8. The appeal is still pending.

Brown’s civil suit came on October 20. The complaint calls the activity a public nuisance and asks the court to stop the bets. Brown said Kalshi “runs an online casino in Utah and calls it a prediction market.” Utah is also one of only two states that ban gambling in their constitutions.

CFTC Sues Utah to Defend Federal Authority Over Event Contracts

The CFTC sued Utah on October 27, one day before the charges. It says Utah is using state law to shut down CFTC-registered contract markets, which Congress placed under federal oversight. In its press release, the agency said it will defend its exclusive jurisdiction.

Chairman Michael S. Selig said event contracts serve hedging and investment goals. He added that they also give the public information about future events. The CFTC says it has started legal proceedings against nine other states. It has also filed briefs in four federal appeals courts and one state supreme court.

Where Each Side Stands and What Could Happen Next

Kalshi describes itself as a federally regulated derivatives exchange overseen by the CFTC. It says users trade event contracts with one another and that no single state should override federal law.

According to Reuters, the company called the charges overreach and political. It also pointed to an earlier win against similar action in Arizona.

The dispute now runs on three tracks. The Tenth Circuit appeal is pending. The CFTC lawsuit will test federal preemption. The criminal case moves ahead in Salt Lake County. Each could shape how other states treat prediction markets.

For now, Utah charges Kalshi while the courts decide who controls these markets. Follow the latest crypto news for further updates.

Disclaimer: This article is for educational and informational purposes only and should not be considered financial or investment advice. Always conduct your own research before making investment decisions.