SALT LAKE CITY — The Utah Attorney General's Office filed formal criminal charges against Kalshi and two of its executives, accusing them of allowing an undercover agent to place money on the outcome of athletic events in violation of Utah's anti-gambling laws.
KalshiEx LLC and company co-founders Tarek Mansour and Luana Lopes Lara are charged with second-degree felony pattern of unlawful activity; 12 counts of online gambling promotion, a third-degree felony; and a count of general gambling promotion, a class A misdemeanor. FOX 13 News obtained a copy of the criminal charges on Wednesday.
Utah and Kalshi have been engaged in a long-running legal and political feud, which insists it is not gambling but "prediction markets" governed by federal laws where people can enter into "contracts" and collect based on the outcome of real-world events. Kalshi pre-emptively sued Utah, seeking an injunction to block the state from taking any action against its website or app. A federal judge refused their request and the 10th U.S. Circuit Court of Appeals also rejected an emergency injunction request.
Utah has a separate civil lawsuit filed against Kalshi, seeking to block it from operating in Utah. This week, the Trump administration sued Utah in Kalshi's defense.
But the criminal charges are a significant escalation of things. The executives face the possibility of prison time, if convicted. In an interview with FOX 13 News in August, Utah Attorney General Derek Brown hinted some action was likely against Kalshi.
"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. A federal court has already ruled that Utah’s gambling laws apply to Kalshi. Kalshi kept taking bets from Utahns anyway. That is illegal, and we’re putting a stop to it," Brown said in a statement to FOX 13 News on Wednesday.
A probable cause affidavit filed with the criminal charges said Utah Attorney General's investigator Scott Eggerman used a Utah-based IP address to create a Kalshi account and place money on the outcome of sports games.
"All the personal user information for the undercover account indicated that the undercover persona was a Utah resident with a Utah residential address, a Utah phone number, and a bank account through a Utah-based banking establishment. All references to wagers and conduct involving Agent Eggerman should be construed to apply to the undercover name and accounts," the affidavit said.
Agent Eggerman was able to place numerous wagers on the outcome of sports events, the affidavit said.
"Through the fees charged on each wager, Kalshi received proceeds derived, directly or indirectly, from a pattern of unlawful activity in which it participated as a principal, and used or invested those proceeds, directly or indirectly, in the establishment or operation of the enterprise," the affidavit said. "As the co-founder and CEO of Kalshi, Tarek Mansour acquired or maintained, directly or indirectly, through a pattern of unlawful activity, an interest in or control of an enterprise, Kalshi."
Mansour and Lopes Lara were issued summons to appear in court. A spokesperson for Kalshi did not immediately respond to an email from FOX 13 News seeking comment.
Read the charging document here: