Utah charged prediction-market operator KalshiEx LLC and two co-founders with gambling offenses on Wednesday, hours after federal regulators sued the state to block enforcement of its gambling ban against CFTC-registered exchanges^1,3.

The Utah Attorney General's Office filed a criminal information accusing KalshiEx, chief executive Tarek Mansour and chief operating officer Luana Lopes Lara of a second-degree felony pattern of unlawful activity, 12 third-degree felony counts of online gambling promotion and a class A misdemeanor of general gambling promotion^1,3.

A probable-cause affidavit said investigator Scott Eggerman opened an undercover Kalshi account from a Utah IP address using a Utah residential address, phone number and bank, then placed multiple wagers on sports outcomes^1,3. KSL reported the account was created starting Sept. 13 and that the charges list 12 games, including football and hockey³.

Attorney General Derek Brown said in a statement to FOX 13 News, "Calling it a ‘prediction market’ doesn’t change what it is, and being federally registered doesn’t put a company above the law"¹. FOX 13 said a Kalshi spokesperson did not immediately respond¹.

Kalshi has argued it is a federally regulated designated contract market, not a sportsbook^1,2,3. Last week Utah sued the company in 3rd District Court seeking to stop it from offering event contracts in the state^2,3. The U.S. Commodity Futures Trading Commission then sued Utah, saying event contracts are swaps under the Commodity Exchange Act and that state gambling law is preempted^2,3.

CFTC Chairman Michael Selig said, "Congress entrusted the CFTC to be the federal regulator with sole responsibility to oversee these markets"². The commission said Utah is the 10th state it has sued over similar enforcement^2,3.

Kalshi sued Utah in February to block enforcement and lost: U.S. District Judge Robert Shelby ruled in August that federal law does not preempt Utah's anti-gambling statutes, and the 10th Circuit denied an emergency injunction^1,2. The CFTC filed in the same district court².

Federal appeals courts have split. The Third Circuit has blocked New Jersey from applying gambling laws to prediction-market sports contracts, while the Sixth and Ninth Circuits have allowed states to proceed². New Jersey has asked the Supreme Court to resolve the conflict; Ars Technica reported 39 other states and the District of Columbia filed a brief supporting that petition².

Mansour and Lopes Lara were issued summonses to appear¹. What a Utah criminal court will do while the CFTC case proceeds, and whether Kalshi will contest the charges, was not reported Wednesday^1,3.