Utah Files Felony Charges Against Prediction Market Kalshi and Its Two Co-Founders
The state accuses the company and its top executives of violating gambling laws, opening a new front in the fight over who regulates prediction markets.
By Yuki Melnyk ·
Utah filed criminal charges on Wednesday against the prediction market operator Kalshi and two of its executives. The move comes months after a federal judge declined to block the state from applying its strict anti-gambling laws to the company's activity.
Prosecutors listed 13 counts of violating the state's gambling prohibition, along with a further charge of profiting from illegal activity. The charging documents name the company itself and its co-founders: chief executive officer Tarek Mansour and chief operating officer Luana Lopes Lara.
The felony charges may signal a new approach for states trying to assert authority over the fast-growing industry. The dispute between states and the prediction market sector appears to be heading toward a showdown at the US supreme court.
Utah attorney general Derek Brown said in a statement that Kalshi has kept operating in the state even though a federal court ruled that Utah's gambling laws apply to it. "Gambling is illegal in Utah, whether you place the bet, run the game, or promote it," Brown said. He added that calling the product a "prediction market" does not change its nature, and that federal registration does not put a company above the law.
The attorney general's office did not immediately say which criminal penalties it would pursue. The felony charges, however, carry the possibility of jail time.
Kalshi responded with a statement calling the charges a "crazy overreach" and saying that "Utah is clearly playing politics." The company said it looks forward to ending the matter in court, as it did in Arizona.
Utah has been at the center of a wider contest between the states and the federal government over who gets to regulate these markets. Litigation has now spread across roughly 20 states, producing a fragmented legal landscape that analysts expect the supreme court will ultimately resolve.
Kalshi has consistently argued that prediction markets fall exclusively under federal jurisdiction and are not subject to state gambling laws.
Source: The Guardian
