Utah filed criminal charges this week against Kalshi, the prediction market, and its co-founders, CEO Tarek Mansour and COO Luana Lopes Lara, in what could become a new playbook for states that want to shut down betting on event contracts. The complaint, filed in a Salt Lake City court, charges 12 counts of online gambling promotion, one count of general gambling promotion, and one count of a pattern of unlawful activity. Prosecutors say Kalshi let an undercover officer place wagers on sports, including NFL games, on 12 occasions in September.
“Gambling is illegal in Utah, whether you place the bet, run the game, or promote it,” Attorney General Derek Brown said in a statement. He added that calling it a prediction market doesn’t change what it is, and that federal registration doesn’t put a company above the law. Kalshi called the charges a “crazy overreach,” said “Utah is clearly playing politics,” and promised to fight them in court “just like we did in Arizona,” where criminal charges against the company were later blocked by a federal judge.
Utah’s case has been building for months. Kalshi sued the state in February to stop it from enforcing its gambling laws. In August, U.S. District Judge Robert Shelby sided with Utah, ruling that federal law doesn’t preempt the state’s ability to enforce its own anti-gambling statutes. The Tenth Circuit denied Kalshi’s emergency request for an injunction on September 8, and Utah filed a civil suit last week seeking to bar Kalshi from offering bets on sports, elections, politics, and other events. On Tuesday, the Trump administration’s Commodity Futures Trading Commission sued Utah to block its enforcement, making it the 10th state the agency has sued. CFTC Chairman Michael Selig said Congress made the CFTC the federal regulator with sole responsibility over these markets. Utah has one of the strictest gambling bans in the country. Its constitution explicitly bars lawmakers from legalizing the activity, and Brown noted the state has maintained that stance for 130 years.
There are 20 states fighting betting platforms like Kalshi, and courts are split. The Third Circuit sided with Kalshi and ruled New Jersey can’t regulate sports bets on prediction markets, while the Sixth and Ninth Circuits ruled for Ohio, Tennessee, and Nevada. New Jersey has asked the Supreme Court to settle the question, with 39 other states and the District of Columbia backing its petition. The result could reach well beyond Kalshi. If Utah wins, rivals like Polymarket and sports betting companies that offer prediction-market products, including DraftKings and FanDuel, could face similar pressure.
But there are more concerns than just the legality of these platforms. Researchers and state officials say gambling harms are rising as more people have access to them. A new Rutgers study, the first national prevalence study of U.S. adolescents and young adults in nearly 20 years, found that about 40 percent of people who bet on prediction markets were classified as high-risk problem gamblers, a rate nearly four times that of other gambling activities. New York’s comptroller said this fall that calls to the state’s problem gambling hotline rose 8.5 percent from 2020 to 2025 and warned that prediction markets, open to 18-year-olds and subject to fewer advertising restrictions than regulated sportsbooks, could make the problem worse. A treatment provider told TIME that its clients are mentioning prediction markets 200 percent more often than last year, and that its 18-to-34-year-old clients have more than doubled since 2024.
Then there’s the question of betting on elections, which has always been a little questionable. Kalshi offers markets on political outcomes, and Utah’s civil suit seeks to bar bets on elections and politics, as well as sports and other events. With midterm elections days away, the idea that people can wager on who wins has drawn scrutiny. Supporters argue the markets provide useful information about future events, while critics see another way to gamble on high-stakes outcomes that’s mostly untouched by the advertising and age rules that govern traditional betting.
Utah has become a testing ground for regulating the internet, from age checks on adult sites to SB 73, the first law targeting VPN use. Now it’s testing whether a state can treat a federally registered exchange like an illegal casino. If the Supreme Court takes the case, it will answer a bigger question than whether Kalshi is a gambling site: who gets to decide what counts as gambling when the betting happens on a phone?