The fight over US prediction markets has turned criminal. On Wednesday, October 28, 2026, Utah Attorney General Derek Brown filed criminal charges against Kalshi, the largest US-regulated prediction market, and its two co-founders, CEO Tarek Mansour and chief operating officer Luana Lopes Lara. The state says Kalshi has been running illegal gambling in Utah.
Key facts
- Who is charged: the company (KalshiEX LLC) and both co-founders personally.
- The charges: 14 counts in total, filed in a state court in Salt Lake County:
- 1 count of a pattern of unlawful activity (a second-degree felony),
- 12 counts of promoting online gambling (third-degree felonies),
- 1 count of gambling promotion (a misdemeanor).
- How the state built the case: in September, an investigator from the attorney general’s office opened an account from Utah and placed 12 bets on football, baseball and other sports. Each bet became one of the online gambling counts.
- What could happen: if convicted, the two founders could face prison time.
- Kalshi’s answer: the company called the case “a crazy overreach” and said Utah is “playing politics”. It says it expects to win in court.
Brown’s argument is simple: calling a sports bet an “event contract” does not change what it is, and being registered with a federal regulator does not put a company above state law. He also says a federal judge ruled in August that Utah’s gambling laws apply to Kalshi, and that Kalshi kept taking bets from Utah residents anyway.
A fight between a state and Washington
The charges came one day after the Commodity Futures Trading Commission (CFTC), the US regulator for futures and derivatives, sued Utah to stop it from using state law against prediction markets. The CFTC says Congress made it the only regulator for these markets, and it has now taken legal action against 10 states, Utah included.
The timeline in Utah moved fast:
- February: Kalshi asked a federal court to block Utah’s gambling laws. It lost.
- October 20: Utah filed a civil lawsuit against Kalshi.
- October 27: the CFTC sued Utah.
- October 28: Utah filed the criminal charges.
Utah is not the first state to go this far. Arizona brought criminal charges against Kalshi earlier, but a federal judge blocked that case. Courts of appeal disagree on whether states can regulate these markets at all, and the US Supreme Court has been asked to decide.
Why it matters
Prediction markets have grown quickly, and crypto apps have started offering them to their users. Criminal charges against the founders of the biggest US platform raise the stakes far above fines and civil lawsuits. How this clash between states and the CFTC ends will decide whether people in many US states can keep using these markets, especially for sports.
This article is for information only and is not financial advice.
