Kalshi criminal charges filed in Utah on Wednesday, October 28, 2026, accuse the prediction market operator and its two co-founders of illegally promoting gambling. Attorney General Derek Brown’s office named KalshiEX LLC, CEO Tarek Mansour and COO Luana Lopes Lara in a 14-count case filed in state court in Salt Lake City. The case came one day after the CFTC sued Utah to stop this kind of enforcement.
Key Takeaways
- Utah charged KalshiEX LLC, Tarek Mansour and Luana Lopes Lara with 13 felonies and one misdemeanor tied to gambling promotion.
- Prosecutors say an undercover state agent placed 12 sports wagers in September after setting up an account as a Utah resident and passing a location check.
- The CFTC sued Utah on October 27, making it the 10th state the agency has taken to court.
- Federal appeals courts are split, and New Jersey has asked the Supreme Court to settle whether states can apply gambling laws to these contracts.
What the Kalshi criminal charges allege
According to the Deseret News, the defendants face three sets of charges:
- one count of pattern of unlawful activity (a second-degree felony)
- 12 counts of online gambling promotion (third-degree felonies)
- one count of gambling promotion (a class A misdemeanor)
A special agent with the Utah State Bureau of Investigation set up an undercover account as a Utah resident and placed 12 sports wagers in September, including on NFL and college games, Decrypt reported. Prosecutors allege Kalshi earned proceeds from the fees it charged on each bet. They also say the wagers totaled $114.87 and the agent lost $25.10, crypto.news reported.
“Gambling is illegal in Utah, whether you place the bet, run the game, or promote it,” Brown said, according to Reuters. “Calling it a ‘prediction market’ doesn’t change what it is, and being federally registered doesn’t put a company above the law.”
Kalshi called the case “a crazy overreach” and said Utah “is clearly playing politics,” adding: “We look forward to putting a stop to this in court, just like we did in Arizona.” Utah hasn’t said what penalties it will seek. The felony counts carry possible jail time, according to the Associated Press as cited by Decrypt.
Why Utah and the CFTC are on a collision course
Utah’s state constitution explicitly bars lawmakers from legalizing gambling, Al Jazeera noted.
The Utah Kalshi lawsuit came first. On October 20, Brown filed a civil complaint against Kalshi and two Susquehanna trading firms. It accused them of running an illegal gambling business by letting Utahns bet on sports, elections, politics and other outcomes, The Block reported. According to crypto.news, the civil suit seeks up to $61.2 million in fees the state says Kalshi collected unlawfully.
On October 27, the Commodity Futures Trading Commission sued Utah to block it from enforcing its anti-gambling laws against prediction markets, arguing that the state was intruding on its jurisdiction. “Congress entrusted the CFTC to be the federal regulator with sole responsibility to oversee these markets,” Chairman Michael Selig said.
Utah already holds a legal win. In August, U.S. District Judge Robert Shelby rejected Kalshi’s bid to block enforcement, ruling that federal law “does not preempt Utah’s ability to enforce its anti-gambling laws.” Kalshi is appealing to the Tenth Circuit, which denied its request for an injunction in September.
Arizona brought the only earlier criminal case. Attorney General Kris Mayes filed criminal charges against Kalshi in March 2026, making it the first state to allege criminal violations, NPR reported. No executives were named in that case, and a federal judge later blocked it, according to Reuters. Utah, by contrast, has charged Mansour and Lopes Lara personally.
Market reaction
Major crypto assets were slightly lower over the 24 hours to October 29, but nothing in the data ties that move to the Utah case.
| Asset | Price (USD) | 24h change | 7d change |
|---|---|---|---|
| Bitcoin (BTC) | $80,115 | -1.41% | -2.06% |
| Ethereum (ETH) | $2,322.83 | -1.52% | -3.36% |
| Solana (SOL) | $100.43 | -2.02% | -3.59% |
| XRP | $1.29 | -2.56% | -2.69% |
Prices are from CoinGecko as of 11:13 UTC on October 29, 2026. The Crypto Fear & Greed Index read 51 (“Neutral”) on the same day. Prediction market users face a separate risk: platform access can change quickly when state and federal law collide, and any stake on an event contract can be lost in full.
What to watch next
Kalshi has said it will fight the charges in court, and it is already appealing the federal ruling on preemption. It remains to be seen whether a federal judge steps in, as one did in Arizona.
The wider dispute over prediction market regulation may end up at the Supreme Court. The Third Circuit ruled in April that New Jersey can’t regulate sports contracts on these platforms. The Sixth and Ninth Circuits sided with Ohio, Tennessee and Nevada in August and September. New Jersey has asked the Supreme Court to settle the question, backed by 39 other states and the District of Columbia. We cover the split in our piece on New Jersey’s petition and the circuit split on prediction markets.
President Donald Trump said in May that it was “critically important that the CFTC’s exclusive authority over Prediction Markets is maintained.” Isaac Rose-Berman, a gambling policy fellow at the American Institute for Boys and Men, told ABC4 the dispute is “just going to keep escalating and eventually get to the Supreme Court.” That is his forecast, not a certainty.
FAQ on the Utah case against Kalshi
What are the Kalshi criminal charges in Utah?
KalshiEX LLC, Tarek Mansour and Luana Lopes Lara face 14 counts: 13 felonies and one class A misdemeanor, all tied to gambling promotion.
Could Kalshi’s founders go to jail?
The felony counts carry possible jail time, according to the AP, but Utah hasn’t said what penalties it will seek. The charges are allegations, not convictions.
Why is the CFTC suing Utah?
The CFTC argues it has sole federal responsibility for overseeing these markets and that Utah is intruding on its jurisdiction by targeting CFTC-registered exchanges. Utah is the 10th state the agency has taken to court.
Sources
- Utah Files Felony Charges Against Kalshi, Co-Founders Over Sports Bets (Decrypt)
- Utah files criminal charges against Kalshi, executives over alleged illegal gambling (The Block)
- Utah files criminal charges against Kalshi and its founders (www.deseret.com)
- Kalshi, founders face 14 criminal charges following Utah gambling probe (crypto.news)
- Utah criminally charges Kalshi with promoting illegal gambling By Reuters (www.investing.com)
- Kalshi, cofounders hit with criminal charges in US state of Utah (www.aljazeera.com)
- Arizona AG files criminal charges against Kalshi over 'illegal gambling' (www.npr.org)
This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrencies are highly volatile; always do your own research before investing.
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