Utah has escalated its confrontation with prediction market platform Kalshi by filing criminal charges against the company and its co-founders, marking a sharp intensification of the nationwide dispute over whether event contracts constitute regulated derivatives or illegal gambling.

Attorney General Derek Brown charged KalshiEx LLC, CEO Tarek Mansour, and COO Luana Lopes Lara with one count of pattern of unlawful activity (a second-degree felony), 12 counts of online gambling promotion (third-degree felonies), and one count of general gambling promotion (a class A misdemeanor).

The allegations center on an undercover investigation in which state agent Scott Eggerman created a Kalshi account on September 13, 2026, using a Utah phone number, local address, and undercover Visa debit card. Over the following 11 days, he placed 12 bets on NFL, MLB, college football, soccer, and an NHL game.

Brown stated: "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."

This criminal action follows Utah's October 20 civil lawsuit against Kalshi and Susquehanna trading firms, which likened the platform to a "back-alley gambling den" and estimated it collected between $30.5 million and $61.2 million in fees from Utah accounts.

Kalshi rejected the charges as a "crazy overreach" and claimed "Utah is clearly playing politics." The company maintains it is a federally regulated derivatives exchange where users trade against one another.

The case builds on an August federal district court ruling that federal commodities law does not preempt Utah's gambling statutes, a decision Kalshi has appealed to the Tenth Circuit. With similar clashes underway in roughly 20 states, analysts expect the regulatory status of prediction markets to reach the U.S. Supreme Court.