Utah Files Felony Charges Against Kalshi and Its Two Cofounders

Utah has moved from civil litigation to criminal prosecution against the prediction-market exchange Kalshi and its two cofounders, Tarek Mansour and Luana Lopes Lara. According to Front Office Sports, Attorney General Derek Brown's office filed three separate cases in state court on Wednesday, October 28, one against the company and one against each founder, each carrying more than a dozen counts. One second-degree count, for a "pattern of unlawful activity," could alone bring a 15-year sentence. Front Office Sports reports that the founders could each face as many as 75 years if convicted. Those are maximum exposures, not findings.

The case rests on a small set of wagers. An undercover agent opened a Kalshi account and placed 12 bets on sporting events, staking $114.87 in total and losing $25.10. The legal question is less about the size of those bets than about whether a federally registered exchange can be prosecuted under state gambling law. Kalshi says Utah is "playing politics" and points to Arizona, where a federal judge ruled in May that the state attorney general could not prosecute it. Utah, for its part, relies on a September ruling that the company cannot stop state regulators from enforcing gambling law. Those rulings do not settle the same question, and no court has yet tested these criminal filings.

The costs are already reaching users. DraftKings said it has removed sports, novelty, political and certain other event contracts from its Predictions product for customers located in Utah, while financial contracts remain available and open positions will settle normally. FanDuel and Polymarket had not said whether they would follow. Residents who wanted those markets now face fewer legal options, whatever the eventual verdict on the charges.

The timing also raises questions. The charges came a day before Kalshi announced a $1 billion funding round at a $40 billion valuation, and less than two weeks after Utah sued Kalshi and the market maker Susquehanna in federal court. The Commodity Futures Trading Commission has now sued Utah, with a spokesperson calling the attorney general's approach "shameful, intimidation-style tactics." The state gains public visibility and pressure; the company gains a federal forum; the founders carry personal exposure that the companies themselves do not.

What would change this picture is a court ruling on whether state criminal law reaches a federally registered exchange, or a plea or dismissal that narrows the case. Until then, these are charges and allegations, and the defendants are entitled to contest them.