Utah prosecutors have brought criminal charges against prediction-market operator KalshiEX LLC and its co-founders, Tarek Mansour and Luana Lopes Lara, in the latest escalation of a widening fight over sports event contracts in the US.
The case follows a civil lawsuit already filed by Utah to stop Kalshi’s operations in the state and recover profits. It also sharpens a broader legal conflict over whether sports-outcome contracts on a CFTC-regulated exchange are financial products or illegal gambling under state law.
Fourteen counts filed in Utah
According to CoinDesk’s Oct. 29 report, Utah prosecutors filed 14 charges against KalshiEX LLC and the company’s two co-founders. The case includes one felony count alleging a pattern of unlawful activity, 12 counts of promoting online gambling, and one gambling-related misdemeanor.
The filing marks a significant step up from Utah’s earlier civil action. By adding criminal charges, the state has intensified its effort to challenge Kalshi’s sports-related offerings and the company’s ability to operate within Utah.
Undercover sports trades cited as evidence
The investigation relied on sports-related trades placed directly on the platform by an undercover investigator, according to prosecutors. An investigator from the Utah Attorney General’s Office used Kalshi with a Utah address, local phone number and debit card to place 12 sports bets.
Prosecutors said those transactions showed that Kalshi promoted illegal gambling in the state. The charges are tied to those alleged betting activities rather than to a broader abstract dispute over prediction markets alone.
A legal fight over gambling versus derivatives
At the center of the case is a basic but unresolved question: whether contracts linked to sports outcomes should be treated as gambling or as financial instruments. Kalshi is a federally authorized exchange overseen by the Commodity Futures Trading Commission, and it offers event contracts tied to sports, elections, economic data and weather outcomes.
Kalshi has argued that its sports-related contracts are financial derivatives and that state governments do not have authority to regulate them. Utah’s position, reflected in both its civil and criminal actions, is that the activity amounts to illegal gambling under state law.
Dispute expands beyond one state
Utah is not the only state pressing the issue. Arizona, Connecticut, Massachusetts, Michigan and Nevada have also taken action against Kalshi through measures that have included criminal charges, civil lawsuits and access blocks.
At the same time, the CFTC has sued Utah, arguing that oversight of event contracts belongs to the federal government. That clash between state enforcement and federal regulatory authority now forms the broader backdrop to Utah’s criminal case.
What comes next
The immediate next step is the criminal proceeding in Utah alongside the state’s earlier civil lawsuit seeking to halt Kalshi’s betting operations and claw back profits. Together, those cases could help determine how far states can go in policing sports event contracts offered on federally regulated exchanges.
More broadly, the dispute is likely to remain focused on the same core issue raised by both sides: whether these products fall under state gambling laws or federal derivatives regulation. That question is now being tested in court rather than only in regulatory arguments.
Source: en.bloomingbit.io