Utah Files Criminal Charges Against Kalshi and Two Founders
Utah filed felony charges against prediction market operator Kalshi and its two co-founders on Wednesday. The state alleges 13 counts of violating its gambling…
Utah filed criminal charges on Wednesday against prediction market operator Kalshi and two of its executives, escalating a fight over who gets to regulate a fast-expanding corner of finance. Utah files criminal charges months after a federal judge rejected Kalshi's effort to stop the state from enforcing its strict anti-gambling laws against the activity.
The charges include 13 counts of violating the state's prohibition on gambling and another charge involving profiting off illegal activity. The state's charging documents name Kalshi and its co-founders: chief executive officer Tarek Mansour and chief operating officer Luana Lopes Lara.
They are felony charges. That carries the possibility of jail time, though the attorney general's office did not immediately say what criminal penalties it would seek.
State says Kalshi kept operating
Utah attorney general Derek Brown said in a statement that Kalshi has continued to operate in Utah despite a federal court ruling that the state's gambling laws apply to the company.
"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," Brown said in the statement.
Kalshi pushes back
Kalshi did not hold back. In its own statement, the company called the charges a "crazy overreach" and said that "Utah is clearly playing politics".
"We look forward to putting a stop to this in court, just like we did in Arizona," the company said.
Kalshi has maintained that prediction markets fall exclusively under federal jurisdiction and are not governed by state gambling laws. Utah's position is the opposite: federal registration does not place a company above state law.
A new tactic in a wider fight
The felony charges could represent a new tactic in how states try to assert regulatory authority over prediction markets. A criminal case puts named executives, not just the company, in the frame.
Utah has been on the front lines of a battle between states and the federal government over who regulates the markets. Litigation has spread across roughly 20 states, creating a fragmented legal landscape that analysts say will likely be settled by the US Supreme Court. The clash appears headed to a showdown there.
For the industry, the split has practical weight. Kalshi's argument that only federal rules apply now faces a state that is treating the same activity as a crime, with possible jail time attached for the people running the company.
Kalshi says it will contest the Utah case in court, as it did in Arizona.
Source: theguardian.com
