A 14th count is a misdemeanor, and the case rests on a state investigator who opened an account on September 13 and placed about a dozen bets over 11 days. Utah is the second state to charge the exchange criminally, a day after the CFTC sued Utah to stop it from enforcing.
Utah filed 14 criminal charges on Wednesday against the prediction market Kalshi and its two co-founders, 13 of them felonies, over sports wagers the state says the company illegally promoted.
The charging documents, posted on the Utah Attorney General's website on Wednesday afternoon, name KalshiEX LLC, chief executive Tarek Mansour and chief operating officer Luana Lopes Lara. They list one count of pattern of unlawful activity, a second-degree felony, 12 counts of online gambling promotion, a third-degree felony, and one count of gambling promotion, a class A misdemeanor. The case was filed in state court in Salt Lake City. None of the reporting on the documents says which defendant faces which counts.
Early coverage split between 13 and 14. Both are right: the 13 felony counts plus the single misdemeanor make 14 charges in total.
The charges grew out of an undercover account. A state investigator, Scott Eggerman, opened a Kalshi account on September 13 using an undercover name and an undercover Visa debit card, with a Utah residence, a local phone number and a Utah bank account, the Deseret News reported. Kalshi asked him to confirm his location through location services before he could place a wager, and the account cleared that check.
Over the following 11 days he placed about a dozen bets on NFL and MLB games, a Utah-Utah State football game and a Real Salt Lake match. In one, he staked $5 on Utah winning by more than 27.5 points, a contract Kalshi priced at a 53% chance of paying out. Utah won by 36 on September 19 and Eggerman collected $4.13.
The per-bet fee is central to the state's theory. The charges say Kalshi took between 3 and 78 cents on each transaction, and prosecutors allege that fee is how the company earned proceeds from wagers it promoted. Kalshi's standing answer is that it runs a market rather than a book. Its customers "trade with each other and set the prices," a spokesperson, Jacki McGavick, said when the state filed its civil case.
Utah Attorney General Derek Brown said in a statement on Wednesday: "Gambling is illegal in Utah, whether you place the bet, run the game, or promote it."
Kalshi called the filing "a crazy overreach" and said "Utah is clearly playing politics." It looked forward to putting a stop to the case in court, "just like we did in Arizona," the company said in a statement reported by Decrypt.
Arizona is the precedent Kalshi is invoking. That state filed criminal charges against the company in March, a federal judge enjoined the prosecution in April, and Arizona is appealing. Utah is the second state to charge the company criminally, and its position in federal court differs from Arizona's. Judge Robert J. Shelby ruled in August that federal law does not preempt Utah's ability to enforce its anti-gambling laws against Kalshi's sports contracts, and the Tenth Circuit declined to block enforcement in September. The wider question of whether states can regulate these contracts at all is already before the Supreme Court, where the NFL asked the justices this month to review Kalshi's Third Circuit win.
The criminal filing also lands a day after the Commodity Futures Trading Commission sued Utah to stop the state enforcing its gambling laws against CFTC-registered exchanges, the tenth state the agency has sued. Chairman Michael Selig has said Congress gave the commission sole responsibility for overseeing these markets. The two cases now point in opposite directions: a federal agency asking a court to stop Utah from enforcing, while Utah prosecutes the company and the two executives who run it.
State enforcement is not confined to Utah. Exchanges including Crypto.com's Nadex and Novig went to federal court against Missouri this month over a similar demand that they stop offering sports event contracts.
Utah's civil case continues alongside the prosecution. The state sued Kalshi in the same court on October 20, and its 63-page complaint estimated the company made between $30.5 million and $61.1 million from Utah accounts between February and October 19, according to the Deseret News. It asks the court to bar Kalshi from operating in the state and to require a court-approved geolocation provider.
The felony counts carry the possibility of jail time. The attorney general's office has not said what penalties it will seek.
