Economy

Utah files felony charges against Kalshi and its founders

Prediction market operator charged under state gambling law despite federal registration, NFL forces Barkley to sell Polymarket stake while other leagues take sponsorship money

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Utah has filed felony charges against prediction market operator Kalshi and its two founders, escalating a fight over whether a federal derivatives registration doubles as a nationwide gambling licence. The charges against co-founder and chief executive Tarek Mansour and co-founder Luana Lopes Lara include 13 counts of violating Utah's prohibition on gambling and one count of profiting off illegal activity, counts that carry the possibility of jail time. The filing comes months after a federal judge rejected Kalshi's attempt to bar Utah 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," Attorney General Derek Brown said in a statement, adding that Kalshi has continued operating in the state despite the court ruling that Utah's laws apply. Utah is the latest in a series of states moving against the prediction-market industry, whose business model rests on a CFTC registration for event contracts being treated as something cheaper and lighter than a gaming licence.

The leagues, meanwhile, are choosing sides by cash. While the NFL bans its players from any involvement with gambling or prediction-market companies — Philadelphia Eagles running back Saquon Barkley said the league directed him to sell his stake in Polymarket, remarking "I was in it before, but no bueno" — the NBA, Major League Baseball, the NHL and MLS all have sponsorship deals with Kalshi or Polymarket or both. LeBron James reportedly earns a paid endorsement from Polymarket, appearing alongside Derek Jeter, Eli Manning and Sue Bird in a commercial. Sports accounts for a major portion of prediction-market volume.

The stakes of the jurisdictional fight are straightforward: if state gambling laws apply, an entire industry that grew on regulatory arbitrage must negotiate entry into each state on gaming regulators' terms. If they do not, the states lose the one lever they have. Meanwhile, a player who owned equity in a prediction platform was told to sell it by the league that accepts advertising money from the same platforms.