USA DAILYUtah files 14 criminal charges against Kalshi and founders
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Utah prosecutors charged prediction market Kalshi and co-founders Tarek Mansour and Luana Lopes Lara with promoting illegal online gambling.
Key points
- Utah AG Derek Brown charged Kalshi, CEO Tarek Mansour and COO Luana Lopes Lara on Wednesday
- CoinDesk counts 14 charges: one felony, 12 promoting online gambling, one misdemeanor
- An undercover agent placed 12 sports wagers on Kalshi in September, per CoinDesk
- The CFTC sued Utah on Tuesday, arguing it has jurisdiction over prediction markets
Utah Attorney General Derek Brown filed criminal charges on Wednesday against prediction market operator Kalshi and two of its executives, accusing them of promoting illegal online gambling, according to The Block. The defendants are Kalshi, CEO Tarek Mansour and chief operating officer Luana Lopes Lara.
CoinDesk reported that the case contains 14 charges against KalshiEX LLC and the two co-founders: one felony count for an alleged pattern of unlawful activity, 12 counts of promoting online gambling and one misdemeanor gambling count.
What prosecutors allege
According to CoinDesk, an undercover agent from the Utah Attorney General’s Office accessed Kalshi in September using a local address, a phone number and a debit card. The state says Kalshi allowed the agent to place 12 sports wagers, which it argues shows the platform promoted illegal gambling in Utah.
The Block reported that Brown rejected the idea that the “prediction market” label changes the nature of the activity. Both outlets said they contacted Kalshi for comment and had not received a response when they published.
How the criminal case fits with other actions
The charges follow a civil lawsuit Brown filed on Oct. 20 against Kalshi and two Susquehanna trading firms, according to The Block. That complaint alleges Kalshi let Utah residents bet on sports, elections, politics and other outcomes, and that calling the bets “event contracts” does not change what they are. CoinDesk said the civil case seeks to stop Kalshi from taking bets from Utah residents and to recover alleged profits.
The dispute has also moved through the courts. The Block reported that Kalshi sued Utah in February to block enforcement of the state’s gambling laws. A judge denied that request, ruling that the federal law Kalshi relied on did not prevent the state from enforcing its laws.
The federal jurisdiction fight
Kalshi has argued that its sports contracts are financial derivatives under the exclusive oversight of the Commodity Futures Trading Commission (CFTC), so state gambling laws should not apply, CoinDesk reported. Utah and several other states disagree.
On Tuesday, the CFTC sued Utah, arguing the state is intruding on the agency’s authority over prediction markets, The Block reported. CFTC Chair Michael Selig has said Congress made the CFTC the federal regulator for these markets. According to The Block, the agency has sued at least 10 states, including Utah.
The criminal charges mark a step beyond the civil litigation, because they name individual executives rather than only the company. CoinDesk noted that Arizona, Connecticut, Massachusetts, Michigan and Nevada have also taken criminal or civil action against Kalshi or restricted access to it, and that states have pursued Polymarket under similar gambling allegations.
What happens next
Neither outlet reported a court date for the criminal case or a response from the defendants. The competing state and federal cases leave open which level of government has authority over sports-related event contracts. Reuters reported on Oct. 21, as cited by CoinDesk, that Kalshi could be headed for a Supreme Court showdown, according to the company’s CEO.