Utah prosecutors have filed felony criminal charges against prediction-market company KalshiEx LLC and its two co-founders, accusing them of promoting illegal gambling after an undercover state agent placed wagers on a dozen games despite repeatedly confirming he was betting from inside Utah. The charges land amid an escalating legal fight over whether sports-related prediction markets amount to regulated financial trading or plain old sports betting dressed up in new language.
According to fox13now.com, the Utah Attorney General's Office filed formal criminal charges against Kalshi and two of its executives, co-founders Tarek Mansour and Luana Lopes Lara. KalshiEx LLC faces a second-degree felony count of pattern of unlawful activity, 12 third-degree felony counts of online gambling promotion, and a class A misdemeanor count of general gambling promotion, the station reports. Mansour and Lopes Lara were issued summonses to appear in court, per the same outlet.
Kalshi describes itself as a prediction market that operates through a federally regulated financial exchange under the oversight of the Commodity Futures Trading Commission, according to ksl.com. Utah Attorney General Derek Brown rejected that framing outright. “A federal court has already ruled that Utah's gambling laws apply to Kalshi. Kalshi kept taking bets from Utahns anyway,” Brown said, as reported by fox13now.com. He added that gambling is illegal in Utah whether someone places the bet, runs the game, or promotes it, and argued that calling it a prediction market does not change the nature of the activity, per the same report.
How the Undercover Operation Unfolded
The case traces back to September, when investigators began building evidence against the company. Starting on September 13, Agent Scott Eggerman began investigating Kalshi by creating an undercover account, the ksl.com report states. Charging documents identify 12 alleged instances in September where Kalshi offered what prosecutors call illegal gambling opportunities on football, soccer, baseball, and college sports, per the indictment cited in the seed reporting from ABC4 Utah.
A Utah State Bureau of Investigation special agent created the undercover Kalshi account while identifying himself as a Utah resident, according to the seed reporting. The agent used a Utah home address and IP address, and Kalshi allowed him to place wagers on multiple football games despite his repeatedly confirming his location in Utah, the ksl.com article notes. By the time the investigation wrapped, the agent had completed 12 wagering instances after location verification confirmed he was in Utah, per ABC4 Utah's account of the charging documents. Prosecutors allege Kalshi received proceeds through fees charged on each wager, acting as a principal in a pattern of unlawful activity, according to the charging documents as described in that reporting.
A Legal Fight Playing Out in Parallel Courts
The criminal charges did not come out of nowhere. The Utah Attorney General filed a civil lawsuit against Kalshi about a week before the criminal charges were announced, according to the seed reporting from ABC4 Utah. The federal government filed its own lawsuit on Tuesday, while Utah filed the criminal information on Wednesday, the same reporting states. The Salt Lake Tribune reports that the Commodity Futures Trading Commission has also brought legal action against nine other states over similar attempts to regulate prediction markets, while more than 40 attorneys general joined a letter disputing the CFTC's proposed rule allowing unfettered prediction-market operation.
That standoff is not unique to Utah. The Tribune notes that the CFTC's May action against Minnesota resulted in an injunction ten weeks later, and that lawsuits over prediction-market regulation are currently open in four federal appeals courts, with the U.S. Supreme Court expected to eventually have the final say. CBS Sports reports that a handful of states have moved to ban prediction markets entirely, while sports-related contracts in particular have been banned or contested elsewhere.
The Stakes Behind the State-by-State Clash
The fight over Kalshi is unfolding against a backdrop of explosive growth in prediction markets nationally. Combined monthly global trading volume on prediction markets reached roughly $50.6 billion in July, according to CBS Sports, compared with about $14 billion wagered monthly at legal U.S. sportsbooks in 2025. The CFTC, for its part, has said prediction markets offer products designed to help the public forecast, plan for, and even hedge against perceptions of future events, according to the agency's own guidance.
ABC4.com reported that it contacted Kalshi for a statement on the criminal charges. Whether the case against the company and its co-founders moves forward in Utah courts, and how it intersects with the competing federal lawsuit, remains to be seen as both tracks of litigation continue to unfold.
