Utah prosecutors have charged Kalshi, CEO Tarek Manzur, and COO Ruaña López Lara with 14 criminal

Utah prosecutors have charged Kalshi, CEO Tarek Manzur, and COO Ruaña López Lara with 14 criminal offenses, including 13 counts of felony gambling, following an undercover operation that revealed 12 sports bets placed by a state investigator. Kalshi collected 3 to 78 cents in fees per transaction, which prosecutors classified as illegal gambling proceeds under Utah law.

The charges include one count of a second-degree felony for “illegal activity pattern,” 12 counts of a third-degree felony for “online gambling promotion,” and one A-level misdemeanor for “gambling promotion.” The state’s attorney general, Derek Brown, stated, “In Utah, betting, operating games, or promoting them is illegal. Calling it a ‘prediction market’ does not change its nature, and registration with federal authorities does not place the company above the law.” Kalshi, valued at $4 billion after a $1 billion investment, denied the allegations, calling the charges “baseless overreach” and vowing to challenge them in court, citing a similar case in Arizona where a federal judge halted state charges against the company.

Undercover Operation Led to Charges

The undercover agent, using a Utah phone number, bank account, and debit card, opened a Kalshi account on September 13. After Kalshi requested location verification, the agent placed 12 bets over 11 days, including the Utah-utah State game and a Real Salt Lake soccer match. The state’s lawsuit against Kalshi, filed on October 20, sought to block the company’s sports, election, and other contracts within the state. A federal judge previously ruled that Utah’s gambling law applied to Kalshi’s sports contracts, while an appeals court rejected a request to halt enforcement.

Broader Legal Battle Involves Federal Agencies

The case is part of a larger dispute involving nine states, including Arizona and New York, challenging state efforts to enforce gambling laws against prediction markets. Meanwhile, Michigan regulators reached a settlement with Polymarket U.S., requiring it to halt new sports contracts in the state. The conflict could escalate to the U.S. Supreme Court, as federal appellate courts remain divided on whether federal law preempts state gambling regulations.

“We will continue to fight these baseless overreach attempts in court,” a Kalshi spokesperson said, referencing the Arizona case. “As in Arizona, we expect this matter to be resolved in court.”