Kalshi, CEO Tarek Mansour and COO Luana Lopes Lara now face criminal charges in Utah. The state’s 14-count filing, dated October 28, is built on 12 wagers a state agent placed on the platform in September, weeks after federal courts declined to shield the company from the state’s gambling ban.
Twelve of the counts are online gambling promotion, a third-degree felony, one for each wager. The state added a second-degree felony count of pattern of unlawful activity, which treats the fees Kalshi collected as proceeds of that conduct, and a class A misdemeanor count of general gambling promotion.
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The Undercover Account
According to a declaration signed under criminal penalty by Special Agent Scott Eggerman of the Utah Attorney General’s Office, he opened a Kalshi account on September 13 under an undercover name, with a Utah address and debit card. Kalshi asked him to confirm his location before his first trade, and he confirmed he was in Utah.
From September 13 through September 24, the agent put between $4 and $30 on each trade, across football, soccer, baseball and hockey games from Salt Lake and Davis counties. Kalshi collected a fee of 3 to 78 cents on every one, the filing says. The declaration alleges that Kalshi, Mansour and Lopes Lara “have continued to provide or offer to provide online gambling to individuals in the State of Utah.”
“Gambling is illegal in Utah, whether you place the bet, run the game, or promote it,” Attorney General Derek Brown was quoted as saying by Reuters. “Calling it a ‘prediction market’ doesn’t change what it is, and being federally registered doesn’t put a company above the law.”
A Kalshi spokesperson reportedly called the charges “a crazy overreach,” adding, “We look forward to putting a stop to this in court, just like we did in Arizona.”
Kalshi’s reference is to Arizona, where the state’s March criminal case was put on hold in April by U.S. District Judge Michael Liburdi at the request of the CFTC and the Justice Department.
The Utah filing lists no case number or assigned judge.
The Preemption Fight
Kalshi sued Utah Gov. Spencer Cox in February, arguing federal commodities law overrides the state’s gambling statutes. U.S. District Judge Robert Shelby rejected that argument on August 4, and the Tenth Circuit denied Kalshi an injunction pending appeal on September 8. Brown brought a civil suit against Kalshi on October 20. This week, the CFTC asked a federal judge to halt that case and bar further state enforcement.
Related Listen: Bits + Bips: Is Kalshi Headed to the Supreme Court Next?
