Washington (United States) (AFP) – Prosecutors in the western US state of Utah have filed criminal charges against prediction market Kalshi, accusing the company of running an illegal online gambling operation, court documents show. Wednesday’s filing in Utah’s Third Judicial District Court charges KalshiEX LLC with a pattern of unlawful activity, along with 12 counts of online gambling promotion, and one misdemeanor count of gambling promotion. Chief executive Tarek Mansour and chief operating officer Luana Lopes Lara are listed as co-defendants.
“This is a crazy overreach; Utah is clearly playing politics,” a Kalshi spokesperson told AFP. “We look forward to putting a stop to this in court, just like we did in Arizona.” Kalshi faces legal challenges in multiple US states where gaming regulators have issued cease-and-desist orders or filed suits accusing the platform of operating an unlicensed gambling business. Federal appeals courts are divided on the issue, and New Jersey has asked the US Supreme Court to settle it. The Arizona case Kalshi cited was a 20-count criminal prosecution brought by the state in March, which a federal judge blocked in May. Arizona has since moved to revive its case.
Platforms such as Kalshi and its biggest rival Polymarket remain illegal or unregulated in most countries outside the United States. They have nonetheless become a routine presence in US media and sports, with Kalshi and Polymarket striking partnerships with major news organizations and professional sports leagues such as the National Hockey League and the National Basketball Association.
The charges in Utah stem from an undercover operation in which a state investigator opened a Kalshi account under a false name in September and placed 12 wagers on professional and college sports. According to the filing, Kalshi required the agent to confirm his location before each bet, and he truthfully reported he was in Utah. The company collected a fee on every wager, which prosecutors say amounted to proceeds from illegal gambling. All forms of gambling are illegal in only two US states: Utah and Hawaii.
The company has argued that its activities are not gambling but something closer to market trading that lets people trade on yes-or-no questions. Kalshi sued Utah in February to block enforcement of the state’s gambling laws. A federal judge ruled against the company in August, and an appeals court refused in September to pause enforcement. The filing says Kalshi kept offering wagers in Utah after both rulings. The criminal case follows a civil suit filed by Utah Attorney General Derek Brown on October 20, in which his office estimated Kalshi had collected $30.6 million to $61.2 million in fees from Utah users.
Separately, Polymarket said on social media that it had temporarily halted trading on its international platform after one of its third-party providers was compromised. The company said it had fixed the issue, referred the matter to law enforcement and was working to bring the platform back online, adding that “anyone who has been impacted will be made whole.”
© 2024 AFP
