Utah has charged prediction market operator Kalshi with 13 felonies and one misdemeanor in a criminal case that also names co-founders Tarek Mansour and Luana Lopes Lara as co-defendants. Prosecutors allege the company promoted illegal online gambling after an undercover state agent placed 12 sports bets through the platform.

Attorney General Derek Brown filed the case on Oct. 28 in Salt Lake County's Third District Court against KalshiEX LLC, Chief Executive Officer Mansour, and Chief Operating Officer Lopes Lara. The first count, pattern of unlawful activity, is a second-degree felony. Twelve further counts charge promotion of online gambling as third-degree felonies — one for each wager placed by the state's agent. A 14th count, promotion of gambling generally, is a Class A misdemeanor.

According to the court filing, the state claims Kalshi “derived proceeds from multiple episodes of online gambling promotion” and used that money to operate its business. Prosecutors also allege that the company's board or senior managers either authorized the conduct or “recklessly tolerated” it — the theory that puts the two founders in the case as individuals rather than leaving the company alone as defendant. The felony charges carry the potential of jail time.

“Gambling is illegal in Utah, whether you place the bet, run the game, or promote it,” Brown said in a statement. “Calling it a ‘prediction market' doesn't change what it is, and being federally registered doesn't put a company above the law.”

Undercover bets spanned five leagues

Special Agent Scott Eggerman opened an undercover account on Sept. 13 using a Utah persona and a debit card. Per the filing, he verified his geolocation and IP address before each wager to confirm he was physically in Utah. Those checks form the evidentiary backbone of the case, since each verified wager corresponds to one of the 12 felony counts.

Eggerman placed the 12 bets from Salt Lake and Davis counties between Sept. 13 and Sept. 24. Kalshi collected a cut of between $0.03 and $0.78 on each, according to the filing.

The wagers covered NFL, college football, MLS, MLB and NHL games, including Cowboys vs. Giants, Utah vs. Utah State, Real Salt Lake vs. Vancouver Whitecaps, and a matchup between the Utah Mammoth and the Colorado Avalanche. For one Eagles vs. Titans game, Eggerman separately bet the first quarter, the fourth quarter and the final total. His largest wager was $30 on the Mammoth, which netted him $14.40 when the team won.

Kalshi vows to fight, citing Arizona

Kalshi dismissed the charges as a “crazy overreach” and said “Utah is clearly playing politics.” “We look forward to putting a stop to this in court, just like we did in Arizona,” the company said.

Arizona this year became the first state to bring criminal charges against Kalshi. Daniel Wallach, a gaming lawyer who teaches at the University of Miami School of Law, said Arizona's misdemeanor case could come back after the Ninth Circuit said Kalshi could not restart sports and election trading in Nevada. He added that Utah's felony-based approach could serve as a model for other states pursuing Kalshi and Polymarket.

The criminal case escalates an earlier civil action. Utah sued Kalshi and two trading firms at Susquehanna on Oct. 20, estimating that Kalshi pulled in $30.6 million to $61.2 million in fees from Utah accounts, according to Cryptopolitan. The day before the criminal charges were filed, the Commodity Futures Trading Commission sued Utah itself over federal jurisdiction.

“Congress entrusted the CFTC to be the federal regulator with sole responsibility to oversee these markets,” CFTC Chair Michael Selig said. The agency has filed lawsuits against at least 10 states.

Kalshi maintains that its event contracts are federally regulated derivatives beyond the reach of state gambling law. However, on Aug. 4, Judge Robert J. Shelby rejected that view, and on Sept. 8 the Tenth Circuit turned down Kalshi's request for an injunction pending appeal. The filing says the two rulings did not stop Kalshi, Mansour and Lopes Lara from continuing to take bets in Utah.

Prediction market litigation is now dispersed across roughly 20 states and could ultimately land before the U.S. Supreme Court.