Kalshi and its co-founders face felony charges for violating Utah gambling laws (arstechnica.com)

99 pointsby rbanffy2 hours ago66 comments

paxy 36 minutes ago

There’s a reason both Kalshi and Polymarket were quick to make political connections (aka pay bribes). They know what they are doing is illegal, and waiting for legislation like sports betting apps did would take too long. So they bought get out of jail free cards instead.

mahboi 12 minutes ago

Trump's family being on the board is alarming for another reason. There are several markets about the president's actions that often involve missiles.

tfrancisl 10 minutes ago

When will we start holding the people who found and operate companies whose sole purpose is to break the law accountable, rather than letting them hide behind "limited liability"?

These founders should be in prison for promoting illegal gambling. Same federal charges mafiosos get caught on for a "friendly card game".

furytrader 5 minutes ago

You need to take a course in basic business.

mahboi 41 minutes ago

Wonder how proxies/VPNs play into this, since Utah was recently in the news about an age verification law that basically said you're liable if anyone physically in Utah accesses a restricted site.

yowayb an hour ago

i feel like there's some provable equivalency between gambling and pyramid schemes

quickthrowman 26 minutes ago

I’m not sure what you mean.

A pyramid scheme uses new investor money to pay fake returns to those who have already invested.

A casino provides games to bet on where expected value for the player is negative. A sportsbook balances their book by modifying the odds to remain as neutral as possible and capture the spread (see ‘vig’).

There’s not a whole lot of similarity there.

MOARDONGZPLZ 16 minutes ago

Probably referring to online gambling specifically. And I would frame it as the folks who promote pyramid schemes are the same as those who promote online gambling.

freecodeio 12 minutes ago

the equivalency is both go bankrupt if people win as much as the house wants you to think they win

jawiggins 32 minutes ago

As much as I am a fan of being able to see the current probability of a future event by checking prediction markets - the argument that there is a meaningful difference between predicting the outcome of a sports game and betting on the outcome of a sports game strains credulity.

jeltz 26 minutes ago

Especially since what Kalshi is doing has existed for 25 years in Europe (we call it betting exchange) and been licenced as sports betting. It is nothing new other than them doing it without licence and that they are more generous in accepting weird market types.

dozerly 26 minutes ago

That’s not what prediction markets give you though. They give you capital-adjusted, human perception-based odds of future events. You aren’t “seeing the probably of future events”.

jawiggins 21 minutes ago

> An event predicted to happen p% of the time happens about p% of the time. Can’t beat that.

https://marginalrevolution.com/marginalrevolution/2026/10/pr...

dozerly 11 minutes ago

You can link me studies that are paid and bought for by these companies all day long. Find me one where the guy is not a consultant to the companies themselves.

jawiggins 8 minutes ago

Huh, I hadn't considered that. Have you seen research from other sources that demonstrate they are not accurate?

gdhkgdhkvff 21 minutes ago

The whole “we provide the most accurate way to predict the future” upside-as-a-counterweight-to-the-downside-of-gambling has always seemed like a hollow benefit to me. I mean, like, okay, let’s say they actually do provide that. Who’s to say that’s a beneficial result? Are we really better off having more accurate forecasting of election results? Or does that just improve boogeyman MBA-types’ abilities to affect election results?

superxpro12 an hour ago

kalshi and polymarket are quite obvious gambling sites. any pedantic arguments to the contrary are strictly financial chaff to enhance their operating margins until the regulations finally catch up.

they were never an innovating marketing play... it was the culmination of a gambling company committing to regulatory capture as evinced by Donald Trump Jr (totally not) sitting on BOTH BOARDS as a "paid strategic advisor" or whatever lie they want to spin.

seki285 an hour ago

A week ago if you dared to say anything critical of polymarket you would be drowned out in replies talking about the "wonderful societal benefits" of gambling on daily life and how it "informs decision making" and helps the "common people".

mahboi an hour ago

I liked it for political races as an alternative to polls. Was terrible for several other things. 99% of it was really just sports betting, which I can't see being a good thing.

rbanffy an hour ago

> I liked it for political races as an alternative to polls.

With enough funds, smaller political races can be gamed.

mahboi an hour ago

Yeah that too, so only the big ones. Obviously the law can't distinguish since it's all the same kind of gambling.

baggachipz an hour ago

The genie's way out of the bottle with sports betting. Nonstop ads, branding tie-ins, billboards, podcast ads, on and on.

And it's terrible and going to destroy sports.

kube-system 13 minutes ago

We don't need more financial incentive to influence the outcome of elections, there's already enough as it is.

MSFT_Edging an hour ago

There are ads on the DC Metro right now that advertise one of these as a source of truth for election polling. The poster says something like "98% accuracy" and in super fine print, specifies something like "within 2 hours of polls closing" and other normal fine print stuff.

To me it's absolutely crazy that the "gamble on anything" apps are being advertised as some kind of polling software. I've already seen at least one race called into question because the gamblers bet on the wrong pony.

They're pure corruption engines designed for insider betting. The top brass of these companies need to be made example of.

austin-cheney an hour ago

The LDS church (The Church of Jesus Christ of Latter Day Saints), which is also based in Utah has provided explicit guidance against participation in Kalshi and Polymarket as gambling.

Here is their official stance on gambling: https://www.churchofjesuschrist.org/study/manual/gospel-topi...

I am not sure how much, if any, impact or influence this has had on Utah law.

mahboi 44 minutes ago

Also "Utah is one of only two states where gambling is also prohibited under the state constitution"

gottorf 35 minutes ago

Funnily enough, Hawaii is the other one. Three more states also do not have lotteries.

mahboi 22 minutes ago

Hm, I could get behind that in California

petcat 43 minutes ago

Ehh I wouldn't try to appeal too much to what the LDS church thinks about this. They require members to give 10% of their annual income to the church, while already having close to $300 billion in the bank.

Everyone knows the state of Utah is largely run by the church.

wredcoll 24 minutes ago

If the state of utah is run by the church, then presumably if the church wants to ban kalshi, it's going to matter.

mahboi 22 minutes ago

The point isn't to appeal, right? Just speculate on whether the church is the reason for this.

jboggan 37 minutes ago

They absolutely have been the main force behind the timing of this push. It was the main topic of General Conference a few weeks ago and one of the most eyebrow-raising articulations of official church policy.

Given the way that the church has explicitly encouraged state legislators to shoot down recent laws it's not surprising to think they'd be pushing for this.

derektank 42 minutes ago

I don’t see the clear difference between something like Kalshi and, say, Robinhood. I do see a clear difference between Kalshi and casinos or sports gambling sites like Fan Duel; in the latter, your counterparty is the institution itself. This creates a lot of perverse incentives on the part of sports gambling sites to maintain their edge, such as banning bettors that are too good at playing the odds. Kalshi, on the other hand, is never your counterparty in any transaction.

Now, Robinhood is a brokerage, regulated by FINRA, and has been fined for misbehavior in the past. So I am more than willing to believe that there is daylight here that I’m not seeing. But anything that lets you speculate attracts a certain clientele, and I think the most important distinction is whether or not the platform itself is an interested party.

mahboi 40 minutes ago

Besides the brokerage being regulated, stock markets are regulated.

calvinmorrison 35 minutes ago

basically, does the government have its thumb on the scale makes it legal. Gambling is so bad and illegal, except when the pennsylvania lottery does it. Alcohol, bad and illegal, except when the state monopoly sells it.

mahboi 34 minutes ago

Yep. Hope they kill Kalshi.

walthamstow 24 minutes ago

Devices that broadcast wifi illegal except when the FCC says so. Damn government with their thumb on the scales.

kube-system 8 minutes ago

There are very good reasons that gambling and financial markets are regulated.

mcmcmc 17 minutes ago

If the differentiating factor is just who you’re betting against, how are Kalshi et al any different from online poker? It’s still gambling, the house just takes a rake

verdverm 11 minutes ago

It's really the worst of both combined. There is ample gambling like options and behavior on Kalshi

policy makers, assistants, journalists, and the like are insider trading - and the president of the united states is intentionally market manipulating for profit

a13n an hour ago

Personally I’m a fan of the non sports side of these apps, Polymarket in particular. They are putting a financial incentive behind accurately predicting the future, which makes these apps basically the most accurate predictor of the future. Available to anyone to view, for free.

It makes sense why they went towards sports gambling, because the market is so big.

austin-cheney 40 minutes ago

I don't think that is logically correct. Commonly perceived probability has been proven frequently wrong whether naturally or due to manipulation. The reasoning here is not exactly the same, but closely aligns to bandwagon fallacy.

It would be interesting to see how frequently Polymarket predictions bet against the most common prediction and by what margins.

mahboi 36 minutes ago

It's the least inaccurate way. There's money to be made if you're sure you have a better way. The real problem is we're already seeing these markets influence the outcome.

austin-cheney 28 minutes ago

You make two valid points, but they still do not qualify the validity of these markets as accurate predictors. There is a difference when people, like Berkshire Hathaway really dig into the financials and management of a company to predict its future versus somebody like me who just money on a stock. In one case an investor seeks to make money and actively influence an outcome, but in my case I am just dropping money and hoping it out paces the rise of inflation because banks are no longer reliable stores of financial security.

Polymarket projections do not provide investigative insight, as in the Berkshire Hathaway example. It's just gambling. Any influence drawn from these predictions is incidental and reactive, as opposed to active market forces like buying/selling.

mahboi 10 minutes ago

Nobody is saying it's better than stock market predictions of assets and company financials. Though there are some asset price predictions on there that exactly match the traditional markets, so it's no worse.

bayarearefugee 36 minutes ago

> They are putting a financial incentive behind accurately predicting the future, which makes these apps basically the most accurate predictor of the future.

There is plenty of data that shows they actually don't work very well outside of surfacing insider knowledge (which the commercial prediction markets superficially pretend to be against).

For events where you can't have full picture insider knowledge like elections, prediction markets are pretty awful at accurate predictions.

georgeecollins 34 minutes ago

I think this is kind of a naive take. There's a reason why you can't take a license insurance policy out on a stranger. Being able to bet that there will be a wild fire or if a plane will be late creates terrible incentives. It's also a new way to do insider trading.

Most uncertain things that people need to hedge (currency, commodity prices) already had a hedge.

In practical terms can someone really give me an example of how they benefited from knowing the future (materially, not emotionally) from a prediction they got from Kalshi? I am honestly curious.

mahboi 31 minutes ago

The only one I can think of is, having a better idea of which way the presidential election goes might've been useful for some people, or some other large election. There's a lot of egg on the faces of all these mainstream media polls.

dozerly 23 minutes ago

So what happens when someone like musk spends a few hundred million to skew what the probability looks like? Suddenly people see that a politician has a 90% chance of winning, and they feel silly voting for the operation?

These are not polling places, they are places for capital to influence odds.

mahboi 20 minutes ago

Eh, sounds like the excuse I kept hearing as to why Trump had favorable odds in the last election. Supposedly a foreigner trying to influence our elections, totally not the Democrats kinda not having a candidate. It would be a very expensive (on average) way to probably not make a difference. Cheaper to just buy up some media companies, which do the same thing, saying their preferred candidate is going to win.

Small elections are susceptible to corruption this way, though.

dozerly 17 minutes ago

There’s been plenty of blatant voter interference, and billions spent influencing American voters, not really seeing where your point is based. More handles to steer democracy with money is not better, period.

AngryData 3 minutes ago

Why not both?

dozerly 25 minutes ago

It is a naive take, and the take that has been most propagandized by these companies.

jmyeet 25 minutes ago

Or they're creating a financial incentive for insider trading and manipulating certain events.

I mean look at all the oil market manipulation in the Iran war. The pattern was repeated so many times: short oil, announce a ceasefire deal with imminent on Sunday before the markets open, cash out on Monday, rinse and repeat.

The argument is that we get transparency on what's likely to happen. I don't think there's any evidence of this. I've seen any number of very poor predictions coming from Kalshi and Polymarket. I have also seen some clear manipulation.

We should call this what this is: gambling.

kube-system 21 minutes ago

> They are putting a financial incentive behind accurately predicting the future,

Unfortunately they also place a larger financial inventive on influencing the outcome of future events. Or incentivizing corruption within the inner circles of these events. Because the larger financial upside in these transactions is to bet against what the market thinks, and influence the outcome.

miltonlost 20 minutes ago

> They are putting a financial incentive behind accurately predicting the future, which makes these apps basically the most accurate predictor of the future.

This is so fallacious. Putting money behind something doesn't make a prediction of a non-knowable more accurate.

Tarot card readings by a psychic must be more accurate predictor than a tarot card reading by an amateur because professional tarot card readers have a financial incentive to be right, so people continue coming back to them for advice. Getting a tarot card reading therefore makes this basically most accurate predictor!!

10111001 an hour ago

This is outrageous! They're tech founders! Penny-ante things like "the law" don't apply to them!

Somebody needs to tell Utah it needs to change its laws to adapt to their business plan, ASAP.

pr337h4m 35 minutes ago

Nobody should ever be threatened with prison time because of a jurisdictional dispute between federal and state governments. That's antithetical to the rule of law, regardless of the specifics of the law or the jurisdictional dispute.

miltonlost 34 minutes ago

They're being threatened with prion time because they broke state law. That the federal government is looking one way while states another is not the cause of the jail time threat.

triceratops 25 minutes ago

> prion time

In addition to being utterly terrifying, this would fall afoul of the "cruel and unusual punishments" thing /s

(What a typo)

kube-system 30 minutes ago

States have the right to enforce gambling laws, even if the defendant calls it something else.

dozerly 19 minutes ago

They allegedly knowingly broke state law, how can state law exist if it was just always going to be overruled by federal jurisdiction?

ImJamal 17 minutes ago

They should be thrown in prison for knowingly violating a law. Trying to play a semantics game (prediction market vs gambling) to get out of it is just scummy. Everybody knows it is gambling.