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On Tuesday, Arizona’s attorney general filed criminal charges against Kalshi, accusing the prediction markets platform of operating an illegal gambling business within the state and unlawfully permitting bets on elections.
The charges, brought by Kris Mayes, the Arizona attorney general, represent the first criminal case a state has pursued against Kalshi. The company has been at the center of a growing dispute over whether state gaming regulators have the authority to oversee prediction market operators.
“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, both of which violate Arizona law,” Mayes said in a statement.
Kalshi, based in New York, responded by criticizing the charges as based on “paper-thin arguments.” The company emphasized that its business differs from sportsbooks and casinos and argued it “should not be overseen by a patchwork of inconsistent state laws.”
“States like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do it,” Kalshi stated.
Platforms like Kalshi allow users to place financial bets on the outcomes of various events, including sports and elections, through trading “event contracts.”
Kalshi contends that these contracts fall under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC), which, under former President Donald Trump, has defended the company in lawsuits brought by states claiming Kalshi operates unlicensed gambling enterprises.
In a 20-count criminal information filed in Maricopa County Superior Court, Mayes’ office alleged that Kalshi violated Arizona law by accepting bets from residents on events including professional and college sports.
Prosecutors also claimed Kalshi illegally accepted bets on the 2028 presidential election, the 2026 Arizona gubernatorial race, the 2026 Arizona Republican gubernatorial primary, and the 2026 Arizona secretary of state race.
