Utah Hits Kalshi, Founders With Criminal Charges Over Sports Bets

An Undercover Agent’s 12 Sports Bets

The Utah Attorney General’s Office filed the charges on Wednesday in state court in Salt Lake City, naming Kalshi and both co-founders as defendants. They face 14 counts: one count of pattern of unlawful activity, which is a second-degree felony; 12 counts of online gambling promotion, which is a third-degree felony; and one count of gambling promotion, which is a class A misdemeanor.

Mansour and Lopes Lara, whose stake in the company makes her the world’s youngest self-made female billionaire by reported net worth, have been issued summonses to appear in court.

“Gambling is illegal in Utah, whether you place the bet, run the game, or promote it. Calling it a ‘prediction market’ doesn’t change what it is, and being federally registered doesn’t put a company above the law,” Attorney General Derek Brown said in a statement. “A federal court has already ruled that Utah’s gambling laws apply to Kalshi. Kalshi kept taking bets from Utahns anyway. That is illegal, and we’re putting a stop to it.”

Kalshi—which is now valued at $40 billion following a $1 billion investment round announced on Thursday—rejected the charges.

“This is a crazy overreach; Utah is clearly playing politics. We look forward to putting a stop to this in court, just like we did in Arizona,” a company spokesperson said in a statement to Fox 13 News.

Arizona filed 20 misdemeanor charges against Kalshi in March, without naming its executives, before a federal judge temporarily blocked the prosecution days ahead of Kalshi’s arraignment in April, then issued an injunction in May. The state is appealing the decision, and the matter is not yet closed in court.

According to the charges, investigator Scott Eggerman opened a Kalshi account on Sept. 13 under an undercover name, with a Utah phone number, bank account, and debit card. He then placed 12 bets over 11 days on NFL, MLB, NHL, MLS, and college football games, including Utah’s game against Utah State and a Real Salt Lake soccer match, after Kalshi asked him to confirm his location in Utah through location services.

One $5 bet that Utah would beat Utah State by more than 27.5 points won $4.13 when Utah prevailed by 36. Prosecutors say the fees Kalshi charged on each trade, ranging from 3 to 78 cents, were proceeds of illegal gambling. Under Utah law, a second-degree felony carries one to 15 years in prison, and each third-degree felony up to five years.

The criminal case is the latest front in a fast-escalating fight. Utah, one of two U.S. states with no legal gambling, sued Kalshi in state court on Oct. 20, in a civil case seeking to stop its sports, election, and other contracts in the state. A federal judge ruled in August that Utah’s gambling laws apply to Kalshi’s sports contracts, and an appeals court refused in September to block their enforcement.

On Monday, the Commodity Futures Trading Commission and the Justice Department sued Utah and Brown in federal court, arguing that federal law gives the CFTC exclusive jurisdiction over event contracts on regulated exchanges. In Arizona, the federal government’s intervention helped secure the injunction that halted the state’s prosecution.

Utah is far from alone. The CFTC’s complaint lists nine other states it has sued over their efforts to enforce gambling laws against regulated exchanges, including Arizona, New York, and Illinois, while Michigan regulators said on Wednesday that Polymarket U.S. had agreed, under a court-approved deal, to stop offering new sports contracts there.

The fight may end up at the U.S. Supreme Court, where New Jersey has asked the justices to hear its case against Kalshi after federal appeals courts split on whether federal law shields sports event contracts from state gambling rules. The petition is backed by 39 states and the NFL, and Kalshi’s response is due Nov. 9.

The U.S. Commodity Futures Trading Commission is again examining whether Polymarket broke its 2022 promise to keep Americans off its…