Utah Attorney General Derek Brown filed criminal charges against prediction market Kalshi and co-founders Tarek Mansour and Luana Lopes Lara on Wednesday, October 28, 2026. The 14 total counts accuse the platform of illegal online gambling promotion, marking the second state-level criminal prosecution of a federally registered event contract operator in the U.S.
Regulatory Clash Over State Jurisdiction and Federal Registration
The criminal complaint filed in Salt Lake City district court follows a civil lawsuit initiated by the Utah Attorney General’s office against New York-based Kalshi. The legal action escalates an ongoing jurisdictional showdown between state anti-gambling statutes and the federal oversight claimed by the Commodity Futures Trading Commission (CFTC). While the CFTC sued Utah on Tuesday, October 27, 2026, to block its civil enforcement actions, the state proceeded with felony and misdemeanor charges.
Utah filed 14 charges against Kalshi and its founders this afternoon, from 12 wagers the attorney general's agent made over the course of 2 weeks in September. The wagers: pic.twitter.com/OVlbyqviZy
Arizona previously filed criminal charges against Kalshi in March 2026, though a federal judge subsequently issued an injunction to block that prosecution while the state appealed. Utah’s state constitution explicitly bars lawmakers from legalizing gambling, creating a direct statutory conflict with federally permitted event contracts.
Undercover Investigation Details and Platform Fees
The state’s criminal complaint details an undercover operation initiated on September 13, 2026, by state investigator Scott Eggerman. Operating under an alias with a local Visa debit card, the investigator placed a dozen wagers over an 11-day period covering NFL, MLB, and collegiate football matches.
Court filings highlight a specific transaction where Agent Eggerman placed a five-dollar spread wager on the University of Utah defeating Utah State by 27.5 points, an outcome assigned a 53% payout probability by the platform. When the University of Utah won by 36 points on September 19, 2026, the investigator collected a $4.13 payout. Prosecutors allege Kalshi collected transaction fees ranging from 3 cents to 78 cents per trade.
Criminal Counts and Legal Posture
The complaint outlines specific charges against both the corporate entity and its leadership:
- One count of pattern of unlawful activity, designated as a second-degree felony.
- Twelve counts of online gambling promotion, classified as third-degree felonies.
- One count of general gambling promotion, charged as a class A misdemeanor.
“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,” Utah Attorney General Derek Brown stated. In contrast, a Kalshi spokesperson characterized the action as a “crazy overreach” driven by political motivations, pointing to the pending appeal in Arizona.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
