Utah Brings Gambling Charges Against Kalshi Executives

Utah has this week launched criminal charges against Tarek Mansour, CEO of prediction market company Kalshi, and Luana Lopes Lara, its COO. Prosecutors charged the two executives with 13 counts of violating the state's gambling ban. They also said the pair were charged with profiting from illegal activity. Prosecutors charged both executives with a serious crime.

The case follows a federal judge's ruling against the company in August. The ruling confirmed that Utah's gambling laws also apply to prediction markets. According to officials, Kalshi continued to operate in the state despite the ruling. Court documents do not specify the penalties the executives could face.

Utah Attorney General Derek Brown said gambling is prohibited in the state, and that placing bets, running a game, or promoting one is also covered by the ban. Brown stressed that calling a product a prediction market does not change its substance, and that being federally registered does not place a company above the law.

Prediction market companies argue that their products differ from traditional sports betting. According to these companies, only the Commodity Futures Trading Commission (CFTC) regulates them at the federal level. Kalshi officials called the charges excessive and said Utah was playing politics. The company said it expects the case to be halted in court, as it was in Arizona.

Following the state's move, DraftKings also announced this week that it will not offer prediction market options in Utah covering sports, novelty, political and some other markets. Kalshi has had mixed results in its legal battles with states. In March, it won a federal case in Ohio, and regulators fined the company $5 million. New York filed a lawsuit against the company in August. It has been reported that the matter could reach the Supreme Court.