By Nate Raymond
Oct 28 (Reuters) - Utah's attorney general brought criminal charges against Kalshi and two of its top executives, accusing the prediction market platform of illegally promoting online gambling and allowing an undercover agent to place wagers on sports events.
Utah Attorney General Derek Brown, a Republican, filed the charges against Kalshi and its two co-founders, Tarek Mansour and Luana Lopes Lara, a day after the US Commodity Futures Trading Commission sued to block the state from
enforcing its anti-gambling laws against the company.
"Gambling is illegal in Utah, whether you place the bet, run the game, or promote it," Brown said in a statement. "Calling it a 'prediction market' doesn't change what it is, and being federally registered doesn't put a company above the law."
The charges, which were filed in a state court in Salt Lake County, mark an escalation for the state's enforcement efforts, after Brown last week filed a lawsuit alleging Kalshi was allowing residents to illegally place bets on sports, elections and politics.
Kalshi has been at the center of an escalating legal battle over the ability of state gaming regulators to police companies in the fast-growing prediction markets industry.
While several states have engaged in litigation with Kalshi, only Arizona has previously pursued a criminal case, which was later blocked by a federal judge.
"This is a crazy overreach; Utah is clearly playing politics," a Kalshi spokesperson said. "We look forward to putting a stop to this in court, just like we did in Arizona."
The charges include one count of pattern of unlawful activity, a second-degree felony; 12 counts of online gambling promotion, a third-degree felony; and one count of general gambling promotion, a misdemeanor.
Charging documents cite 12 different instances in which an agent was allowed to place bets on football, baseball and other sports matches in September.
According to the charging papers, Kalshi has allowed Utah residents to place bets using its platform even after a federal judge in August ruled that federal law did not prevent Utah from enforcing its state gaming laws against the company.
Under Republican President Donald Trump's administration, the CFTC has shared Kalshi's position that trading on prediction markets falls exclusively under the agency's jurisdiction.
That question has divided appeals courts and is likely to ultimately be decided by the US Supreme Court, which has been asked to resolve the issue.
(Reporting by Nate Raymond in Boston, editing by Deepa Babington)
