Utah prosecutors brought criminal charges against prediction-market operator KalshiEX and co-founders Tarek Mansour and Luana Lopes Lara on Oct. 28, escalating a fight over the exchange’s sports contracts from a civil effort to stop its Utah business to a prosecution naming its executives personally.
The charging information published by the Utah attorney general’s office, dated Oct. 28 and addressed to the Third Judicial District Court in Salt Lake County, lists 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. It names Mansour and Lopes Lara as co-defendants.
The criminal case adds potential imprisonment to a dispute previously centered on whether Kalshi could offer contracts in Utah. Utah’s courts describe the possible prison term for an individual convicted of a second-degree felony as one to 15 years. The prosecution comes two days after the federal government and Commodity Futures Trading Commission filed a separate suit seeking to block Utah’s enforcement against federally regulated exchanges.
Kalshi lets users trade contracts that pay out based on the outcomes of real-world events. Prosecutors allege that investigator Scott Eggerman created an undercover account identifying him as a Utah resident, then placed 12 sports wagers while in the state during September. The probable-cause declaration says Kalshi required him to confirm his location before his first wager and allowed the transaction after he confirmed he was in Utah.
The state alleges Kalshi collected transaction fees and used the proceeds to operate its business, forming the basis of the pattern-of-unlawful-activity charge. That count cites Utah Code Section 76-17-407; the online and general gambling-promotion counts cite Sections 76-9-1404 and 76-9-1405, respectively.
“This is a crazy overreach; Utah is clearly playing politics,” Kalshi said in a statement to FOX 13 News. “We look forward to putting a stop to this in court, just like we did in Arizona.”
Federal Protection Sought After Utah Court Defeat
Utah’s Oct. 20 civil lawsuit sought to stop Kalshi from offering what the state alleges are illegal bets and recover allegedly unlawful profits. The criminal prosecution targets sports transactions after Kalshi had already lost a federal challenge to Utah’s authority.
In an Aug. 4 ruling, U.S. District Judge Robert J. Shelby granted summary judgment to Utah officials, concluding that the Commodity Exchange Act did not preempt the state’s enforcement of its gambling laws against Kalshi. The attorney general’s office says Kalshi appealed and the Tenth Circuit denied its request for an injunction pending appeal on Sept. 8.
The CFTC and United States take the opposite position in their complaint dated Oct. 26: they argue the targeted event contracts are swaps under the commission’s exclusive jurisdiction and that federal law displaces Utah’s gambling restrictions.
Their requested injunction is broader than stopping the existing civil case. It would prohibit Utah officials from investigating CFTC-regulated entities, affiliates and partners for violations of state laws, or enforcing those laws, as applied to transactions on CFTC-regulated contract markets.