Utah has opened a criminal case against prediction-market operator Kalshi and its two senior executives, placing Chief Executive Officer Tarek Mansour and Chief Operating Officer Luana Lopes Lara alongside the company as defendants in a dispute that had previously played out through civil lawsuits and regulatory challenges.
The charges, filed on Oct. 28, allege illegal gambling activity and promotion of online gambling after a Utah state investigator placed 12 trades on Kalshi using an account tied to Utah-based identification and internet access. Utah charged the company, Mansour and Lara with one second-degree felony, 12 third-degree felonies and one Class A misdemeanor.
The filing gives Utah a more forceful enforcement tool while Kalshi continues to argue in federal court that its event-contract markets are regulated under federal commodities law rather than state gambling statutes. The case also arrives one day after the Commodity Futures Trading Commission sued Utah to stop the state from enforcing its gambling laws against a CFTC-registered market.
Under Utah law, a second-degree felony can bring a prison sentence of one to 15 years, while a third-degree felony carries a maximum term of five years. The charges remain allegations, and no convictions have been reported.
Undercover bets form the basis of Utah's case
Utah's criminal filing relies on an undercover operation involving Scott Eggerman, a state investigator who opened a Kalshi account in September, according to the charging documents. Eggerman used a Utah address, Utah phone number, bank account and a Utah-based IP address, the filing said.
He then placed 12 wagers worth a combined $114 on contracts tied to NFL, MLB, MLS, NHL and college football events. Utah treats these transactions as illegal bets under state law, while Kalshi has maintained that its contracts are federally regulated derivatives listed on a designated contract market.
The 12 alleged wagers each underpin a third-degree felony count. The additional second-degree felony and misdemeanor are tied to the broader allegation that the company and its executives offered or promoted unlawful online gambling within the state.
Naming Mansour and Lara as criminal defendants raises the stakes beyond the civil penalties and cease-and-desist demands faced by prediction-market companies in several states. The Utah filing seeks to connect the platform's availability to state residents with the personal responsibility of the executives overseeing its operations.
Civil dispute targets tens of millions in alleged profits
The criminal complaint followed Utah's Oct. 20 civil action against Kalshi. In that case, the state sought to halt the platform's operations in Utah and recover an estimated $30 million to $60 million in profits allegedly connected to Utah accounts.
Utah's civil complaint said Kalshi had more than 30,000 accounts associated with the state. It asked the court to prohibit trading in contracts related to elections, politics, culture and sports, along with a fifth category labeled "mentioned" event contracts in the complaint.
The state also requested that Kalshi use a court-approved geolocation provider. Geolocation tools verify a user's physical location before allowing a transaction, and they have become a central remedy sought by states that want prediction-market operators to block local access without shutting down their national platforms.
Utah's civil action named a Susquehanna-related trading firm among parties associated with the disputed activity. The allegations have not been resolved by a court.
Federal agency challenges Utah enforcement
The CFTC entered the Utah fight on Oct. 27 with a federal lawsuit seeking to prevent the state from taking enforcement action against Kalshi. The regulator argued that the Commodity Exchange Act governs swaps and trading on designated contract markets, leaving state gambling laws unable to override the federal framework for these products.
The agency's position supports Kalshi's central legal argument: that event contracts listed on a CFTC-regulated venue fall within commodities law even when their outcomes involve sports, elections or other real-world events.
Utah has won an earlier round in that separate dispute. Kalshi sued Governor Spencer Cox and Attorney General Derek Brown in February, seeking a ruling that the Commodity Exchange Act preempts Utah's anti-gambling laws. In August, U.S. District Judge Robert J. Shelby granted summary judgment for Utah, finding that federal law did not displace the state's gambling restrictions, particularly for sports-related event contracts.
Kalshi appealed Shelby's decision to the U.S. Court of Appeals for the Tenth Circuit. Briefing on the merits was still pending when Utah filed its criminal charges, leaving the company to defend both its appeal and a new prosecution in state court.
A Tenth Circuit ruling in Kalshi's favor could limit Utah's ability to apply gambling rules to contracts traded on federally registered markets. A ruling for Utah would strengthen the position of states that view sports and similar contracts as betting products regardless of their federal market structure.
State challenges have produced uneven results
Utah is one of roughly 20 states involved in litigation or regulatory disputes concerning Kalshi, according to the report. Court outcomes have varied by jurisdiction, exposing the difficulty of operating a national market when gambling law is primarily enforced at the state level.
New Jersey has allowed operations under CFTC oversight, according to the report. Courts or regulators in Nevada, Ohio and Tennessee have backed state-level enforcement authority in separate matters, while other disputes remain unresolved.
New York Attorney General Letitia James added another major case on Oct. 23, suing Kalshi for $36 billion in damages and seeking to shut down its business in the state. A federal judge in New York had previously denied Kalshi's request to block state enforcement.
Several states have pushed for tailored operating restrictions rather than a full prohibition across every type of contract. Michigan required geolocation measures and cited potential penalties of up to $500,000 per day for violations. Nevada's restrictions covered sports, elections and entertainment contracts, while Washington's reported limits left commodity, climate, economic and financial markets available. Massachusetts has limited sports contracts while an appeal proceeds.
Those distinctions reflect an emerging regulatory divide. States have generally focused their objections on contracts resembling familiar forms of wagering, especially sports markets, while some have treated contracts tied to economic indicators or commodities differently.
Kalshi's dispute with Utah will now test that divide in a criminal courtroom as well as in federal appeals litigation. The company's challenge is no longer confined to whether its markets can remain open in individual states; its executives must also respond to allegations carrying potential prison terms under Utah law.
For deeper context on regulation and prediction markets, explore how future rules could reshape prediction markets for traders.
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