The Arizona Attorney General’s office has filed criminal charges against Kalshi, a prediction markets platform, alleging the company operated an unlicensed gambling business and engaged in illegal election wagering. Attorney General Kris Mayes announced the charges on Tuesday, citing violations of state law regarding betting on sports and elections.
KalshiEx LLC and Kalshi Trading LLC face a total of 20 counts, with accusations that the platform accepted bets from Arizona residents on various events, including contracts related to the upcoming 2028 presidential election and the 2026 gubernatorial race in Arizona.
“Arizona law prohibits operating an unlicensed wagering business, and separately bans betting on elections outright,” Mayes stated.
This legal action follows recent guidance from the Commodity Futures Trading Commission (CFTC), which indicated a more favorable federal stance toward prediction markets. The CFTC’s new rulemaking process, led by Chairman Mike Selig, asserts the agency’s “exclusive jurisdiction” over event contracts, positioning platforms like Kalshi as regulated derivatives venues rather than gambling operators. This creates a conflict with states like Arizona that maintain strict regulations against sports and election-related betting.
A spokesperson for Kalshi criticized the charges, claiming they are based on weak arguments. “States like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do it,” the spokesperson said. They emphasized that Kalshi is under federal jurisdiction and should not be subject to inconsistent state laws.
Legal interpretations regarding the status of prediction market providers vary across jurisdictions. In Nevada, a federal judge ruled that Kalshi’s sports-related contracts fall under state gaming regulations, while a Massachusetts court reached a similar conclusion. Conversely, a federal judge in Tennessee recently blocked state regulators from enforcing a cease-and-desist order against Kalshi.
Mayes asserted that Kalshi is misrepresenting its operations. “Kalshi may brand itself as a ‘prediction market,’ but what it’s actually doing is running an illegal gambling operation and taking bets on Arizona elections,” she said, reiterating the state’s prohibition against unlicensed wagering and election betting.
This legal dispute intensifies an ongoing conflict between Kalshi and state regulators. The company had previously preemptively sued Arizona on March 12, as part of a broader strategy that includes litigation against Iowa and Utah. Mayes criticized Kalshi’s approach, accusing the company of evading state laws by seeking resolution in federal courts.
“Kalshi is making a habit of suing states rather than following their laws,” Mayes remarked. “In the last three weeks alone, the company has filed lawsuits against Iowa and Utah, and now Arizona.”
The filing also referenced a recent ruling in Ohio where a judge denied Kalshi’s request for a preliminary injunction, affirming the state’s authority to enforce its gambling laws.
Kalshi continues to assert that its event contracts are federally regulated derivatives, a classification that is currently being tested in various legal contexts.
Arizona's Attorney General has charged prediction market operator Kalshi with 20 counts of illegal gambling and election wagering, escalating a legal battle over the regulation of such platforms. The case highlights the tension between state and federal jurisdictions regarding betting laws.