Utah has filed 14 criminal charges against prediction market operator Kalshi and its co-founders, escalating a legal battle that now exposes the company to both criminal prosecution and civil penalties over its sports and event contracts.

The charges include

  • one felony count alleging a pattern of unlawful activity,

  • 12 felony counts of promoting online gambling, and

  • one misdemeanor count.

Prosecutors allege Kalshi continued accepting wagers from Utah residents despite a federal court ruling allowing the state to enforce its gambling laws.

The case relies on evidence gathered by an undercover agent from the Utah Attorney General’s Office who used

  • a local address,

  • phone number, and

  • debit card

to access the platform in September 2026.

Kalshi reportedly allowed the agent to place 12 separate sports wagers. The state argues that these transactions demonstrate the platform is actively promoting illegal gambling within Utah’s borders.

 

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The criminal case follows a separate civil lawsuit in which Utah is seeking to stop Kalshi from offering contracts on sports, elections, politics, and other events, and recover profits allegedly earned in the state.

 

The state has estimated those profits at $30 million to $60 million.

 

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The dual legal actions raise the stakes for prediction market operators where civil lawsuits can seek

  • injunctions,

  • restitution, and

  • financial penalties,

while criminal prosecutions can expose companies and executives to fines and, depending on the charges, potential imprisonment.

 

The dispute also highlights the risk of defying court rulings while regulatory authority remains contested.

 

Kalshi maintains that its event contracts are federally regulated financial derivatives under the Commodity Futures Trading Commission (CFTC) rather than gambling products subject to state laws.

 

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The CFTC has separately sued Utah arguing that federal law gives it exclusive authority over the relevant markets. Kalshi has called the criminal charges an over-reach and said it will challenge them in court.

The legal fight extends beyond Utah with states including Arizona, Nevada, Massachusetts and others pursuing restrictions or litigation against prediction market operators. The outcome could determine whether platforms such as Kalshi and crypto-based rival, Polymarket, face a patchwork of state gambling laws or operate primarily under federal oversight.

 

 

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