By Basant El-Faramawy
Utah has filed criminal charges against prediction market operator Kalshi and its two co-founders, escalating a legal battle over whether states or the federal government can regulate the fast-growing industry.
Criminal charges filed
The charges, announced Wednesday, include 13 counts of violating Utah's gambling prohibition and one count of profiting from illegal activity. Utah Attorney General Derek Brown said Kalshi continued operating in the state despite a federal court ruling that Utah's gambling laws apply to the company.
Kalshi response
Kalshi, led by CEO Tarek Mansour and COO Luana Lopes Lara, called the charges a "crazy overreach" and vowed to fight them in court, citing a similar case in Arizona that was put on hold.
Federal vs state jurisdiction
The case highlights a broader conflict: Kalshi argues prediction markets fall exclusively under federal jurisdiction, while states insist they constitute illegal gambling. Under President Donald Trump, the Commodity Futures Trading Commission has sided with Kalshi, suing at least 10 states to block state-level regulation.
Legal analyst perspective
Legal analyst Daniel Wallach said Utah's pursuit of felony charges marks a potential shift from civil to criminal enforcement and could signal how other states approach Kalshi and rival platform Polymarket.
Court rulings
A federal judge previously rejected Kalshi's request to block Utah's enforcement, and the 10th Circuit Court of Appeals declined to halt enforcement during appeal. Utah also filed a separate civil suit last week seeking to stop Kalshi from trading on sports, elections and other outcomes in the state.
