Key Notes
- Utah filed a 14-count criminal case naming Kalshi and co-founders Tarek Mansour and Luana Lopes Lara.
- Federal authorities are seeking to block state enforcement and an October 30 order set a November 6 conference.
- Kalshi announced a $1 billion Series G at a $40 billion post-money valuation on October 29.
Utah has filed criminal charges against Kalshi and its co-founders, escalating a dispute over whether a federally regulated prediction market can offer sports contracts in a state that bans gambling.
The October 28 case names KalshiEX LLC, chief executive Tarek Mansour and chief operating officer Luana Lopes Lara. Prosecutors allege the platform allowed an undercover agent in Utah to place sports wagers and collected fees on those transactions. The allegations have not been established at trial.
The prosecution puts the founders in direct conflict with state authorities while their federal regulator seeks to stop Utah’s enforcement. Kalshi rejected the case as a “crazy overreach” in a response to The Block and said it would challenge the charges in court.
An Undercover Account at the Center of the Case
The charging document sets out 14 counts: one second-degree felony alleging a pattern of unlawful activity, 12 third-degree felony counts of online gambling promotion, and one misdemeanor count of general gambling promotion.
According to prosecutors, Special Agent Scott Eggerman opened an undercover account on September 13 using details identifying its holder as a Utah resident. He verified that both his physical location and internet address were in the state.
The filing describes transactions through September 26 involving professional and college sports. In one example, it alleges Eggerman took a $10 position on the Dallas Cowboys beating the New York Giants after confirming his Utah location, and Kalshi charged a 44-cent fee.
Utah’s position is that describing these transactions as event contracts does not remove them from its gambling prohibition. The state’s constitution bars the legislature from authorizing gambling, a restriction the attorney general also cited in his earlier civil case.
Federal Authorities Ask the Court to Intervene
The United States and Commodity Futures Trading Commission filed their own federal lawsuit on October 26. The agency announced it the following day, arguing that the Commodity Exchange Act gives it exclusive jurisdiction over derivatives traded on registered exchanges and prevents Utah from banning those transactions.
That is the federal government’s legal position, rather than a final ruling settling the dispute. Utah had won an August judgment in Kalshi’s separate challenge to state enforcement, and the company appealed.
The conflict extends a jurisdiction battle already playing out elsewhere. New York’s lawsuit also sought to restrict Kalshi’s operations under state law.
Federal authorities subsequently sought emergency relief against Utah’s civil and criminal enforcement. An October 30 scheduling order set an in-person conference for November 6. The order arranged the next procedural step; it did not grant the requested injunction or dismiss the criminal charges.
A Billion-Dollar Round Followed the Charges
On October 29, one day after the prosecution began, Kalshi announced funding of $1 billion at a $40 billion post-money valuation. Wellington and Sequoia co-led the Series G round.
Kalshi said the capital would support new products, institutional adoption and international expansion. The financing gives the company resources for its growth plans while leaving the central legal question unresolved: how far federal derivatives oversight displaces state gambling laws.
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