Utah has filed 13 felony gambling counts and one charge involving illegal profits against Kalshi and its co-founders, after a federal judge declined to block enforcement of the state’s gambling laws. Utah says federal registration does not exempt the company from state law, while Kalshi argues that prediction markets fall under federal authority. The Commodity Futures Trading Commission has sued at least 10 states seeking to stop their regulation of these markets. Utah’s separate civil case seeks to halt a range of trading, require court-approved geolocation enforcement and recover Utah profits. The competing lawsuits leave the rules unsettled, with further court proceedings ahead and a possible U.S. Supreme Court resolution.
TLDR: Utah’s criminal charges and separate civil lawsuit deepen the dispute over state authority to regulate Kalshi’s prediction markets. The company contests the state’s position, while federal and state cases continue without a final national ruling.
Utah has filed criminal charges against prediction-market operator Kalshi and two of its co-founders, intensifying a dispute over whether state gambling laws apply to the company’s markets. The charges follow a federal judge’s refusal to block Utah from enforcing those laws. The case adds a criminal proceeding to a conflict already playing out in courts across the country.
Utah Attorney General Derek Brown’s stated rationale is that gambling remains illegal in Utah even when a platform calls its activity a prediction market or holds federal registration. Brown said Kalshi continued operating in the state after a federal court ruled that Utah’s gambling laws apply. That position reflects the state’s view that local law must be enforced within its borders.
The charging documents name Kalshi, chief executive Tarek Mansour and chief operating officer Luana Lopes Lara. The state filed 13 counts alleging violations of Utah’s prohibition on gambling, along with a charge involving profiting from illegal activity. The felony counts carry the possibility of jail time. Utah’s attorney general’s office has not said what criminal penalties it will seek.
The dispute is also about which level of government has authority over prediction markets. Kalshi has argued that federal oversight is exclusive and that state gambling laws do not govern its platform. Under President Donald Trump, the Commodity Futures Trading Commission has taken a similar position and has sued at least 10 states, including Utah, in an effort to stop state regulation of prediction markets.
That federal position does not end the state case. Kalshi sued Utah in February, asking a federal judge to prevent enforcement of the state’s gambling restrictions. The judge rejected the request, concluding that the Commodity Exchange Act, the federal law Kalshi cited, did not prevent Utah from enforcing its laws. The 10th U.S. Circuit Court of Appeals later declined to pause Utah’s enforcement while Kalshi appeals.
The result is a divided legal landscape, not a settled national rule. Litigation has spread across roughly 20 states, and analysts expect the dispute could ultimately reach the U.S. Supreme Court. State authority and federal oversight are both at issue, and court decisions so far have not resolved every question about how prediction markets should be regulated.
Utah’s choice to bring felony charges marks a possible change in state enforcement strategy. States have primarily pursued civil actions against prediction-market operators, according to legal analyst Daniel Wallach. He said Utah’s case could influence how other states approach Kalshi and Polymarket. The charges are not a final finding of guilt, and Kalshi disputes Utah’s position.
The company called the charges a “crazy overreach” and said Utah was “playing politics.” It said it would challenge the case in court, referring to its earlier fight in Arizona. Arizona filed the first criminal charges against Kalshi earlier this year, accusing it of operating an illegal gambling business. A judge later put that case on hold. Wallach said Arizona’s ability to pursue misdemeanor charges could be restored after an appeals court declined to let Kalshi resume sports and election-event trading in Nevada while it contests the state’s effort to shut it down.
Utah has also filed a separate civil lawsuit against Kalshi and related companies. It asks a state court to stop trading in Utah on sports, elections, politics, culture and other outcomes. The state also seeks a court-approved geolocation provider to enforce any restriction and asks the defendants to give up profits earned in Utah. These requests remain matters for the court to consider; the excerpt does not identify a hearing date or a filing deadline.
The practical impact is already defined in the charges and requests, though important details remain unknown. Kalshi and its two named executives face 13 gambling-related felony counts and one count involving profits from illegal activity, with possible jail time but no announced penalty demand. The civil case seeks limits on a broad range of markets, geolocation-based enforcement and repayment of Utah profits. No new forms, fees, compliance deadline or implementation schedule are specified in the available account. For users and operators, the conflicting claims of state and federal authority leave uncertainty over which rules will ultimately govern.
The next steps are court proceedings in Utah and continued litigation over state and federal authority. The U.S. Supreme Court may eventually settle the wider dispute, but no timetable is provided. Those proceedings and any court-ordered compliance measures will determine what restrictions apply and how they are enforced. For now, the experts do not have a settled answer; the courts still have to provide one.
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