Utah has filed 14 criminal charges against prediction-market operator Kalshi and co-founders Tarek Mansour and Luana Lopes Lara, escalating a dispute over whether federally regulated event contracts can also be prosecuted under state gambling laws. According to charging documents obtained by FOX 13, the case includes one second-degree felony count of Pattern of Unlawful Activity, 12 third-degree felony counts of Online Gambling Promotion and one Class A misdemeanor count of General Gambling Promotion. The charges were filed on October 28 in Utah state court.
The prosecution is based partly on an undercover investigation in which a Utah Attorney General’s Office agent created a Kalshi account using Utah-based identity, banking and location information and placed 12 sports wagers during September. Prosecutors allege those transactions demonstrate that Kalshi continued allowing prohibited gambling activity inside Utah after a federal district court had already ruled that federal commodities law did not preempt the state’s anti-gambling statutes. That August 4 ruling remains on appeal.
Criminal Case Escalates Utah’s Existing Challenge
The August ruling came from U.S. District Judge Robert Shelby, who granted summary judgment to Utah after Kalshi sought to prevent the state from enforcing its gambling laws against sports-event contracts. The court rejected Kalshi’s argument that registration as a CFTC-designated contract market automatically insulated those products from Utah law. The Tenth Circuit subsequently declined to block state enforcement while Kalshi’s appeal proceeds, leaving the district court judgment operative for now.
The dispute mirrors other state-level battles over prediction markets. A Michigan court order restricting certain Kalshi sports contracts similarly forced the platform to confront state gambling requirements despite federal registration. The same underlying contract can therefore face competing classifications: a federally regulated event contract under commodities law and alleged gambling under state law.
Utah separately filed a civil case on October 20 seeking injunctions, restitution and disgorgement from Kalshi and related entities. The state’s frequently cited $30.6 million to $61.2 million figure belongs to that civil complaint and is an estimate of fees attributed to Utah-linked trading, not a criminal forfeiture amount or adjudicated profit figure. Utah says the estimate was derived from account activity and assumed per-contract fees, while discovery could produce a different total.
CFTC Opens a Separate Federal Front
One day before Utah filed the criminal charges, the Commodity Futures Trading Commission launched its own lawsuit against the state. In the CFTC’s official October 27 announcement, the agency argued that Congress gave it exclusive federal authority over CFTC-registered derivatives exchanges and that Utah’s enforcement efforts interfere with that national framework. The action seeks to prevent Utah from using state gambling laws to shut down federally registered markets.
That federal position aligns with the broader CFTC effort to define prediction-market regulation alongside state gambling laws. New York has separately challenged Polymarket under its gambling statutes, while the CFTC has continued asserting federal authority over designated contract markets. The legal conflict is therefore broader than Kalshi’s Utah operations and now spans multiple jurisdictions and different categories of event contracts.
Kalshi has called Utah’s criminal case an overreach and said it intends to contest the charges. The filing represents allegations, not findings of criminal liability, and neither Mansour nor Lopes Lara has been convicted of the offenses alleged by Utah. They were issued summonses rather than arrest warrants, according to the charging documents.
The broader jurisdictional issue is also unlikely to be resolved by a single Utah proceeding. Federal appellate courts have already reached conflicting conclusions about the relationship between the Commodity Exchange Act and state gambling authority, while prediction-market integrity rules continue evolving through measures such as restrictions on trading with nonpublic government information. Utah’s prosecution now adds potential individual criminal liability to a dispute that had largely centered on civil enforcement, market access and federal preemption.
