Arizona Attorney General Kris Mayes filed criminal charges against Kalshi on Tuesday, accusing the prediction market platform of operating an unlicensed gambling business and offering election betting in the state, actions she said violated state law.
Mayes charged KalshiEx LLC and Kalshi Trading LLC with 20 counts, alleging the platform accepted bets from Arizona on a wide variety of events in violation of Arizona law, including sports and elections, such as contracts betting on the results of the 2028 presidential race and the 2026 gubernatorial race.
“Arizona law prohibits operating an unlicensed betting business and separately prohibits outright betting on elections,” the attorney general said in a statement.
The charges come days after the Commodity Futures Trading Commission (CFTC) signaled a more supportive federal stance toward prediction markets, issuing new guidance and launching a rulemaking process under Chairman Mike Selig.
That effort asserted the CFTC’s “exclusive jurisdiction” over event contracts and casts platforms like Kalshi as regulated derivatives venues rather than gaming operators, setting up a direct clash with states like Arizona that continue to process sports and election-related contracts.
“Unfortunately, a state can file criminal charges on paper-thin arguments,” a spokesman for Kalshi said in a statement. “States like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do so. As other courts have recognized and the CFTC confirms, Kalshi is subject to federal jurisdiction. It’s different than what sportsbooks and casinos offer their customers, and it shouldn’t be overseen by a patchwork of inconsistent state laws.”
Different courts have ruled differently on whether prediction market providers are subject to state laws. A federal judge in Nevada ruled last year that the company’s sports-related contracts are subject to state gambling regulations. A state court in Massachusetts also found that sports-related conduct could be governed by state regulations in that state. A federal judge in Tennessee ruled the other way earlier this year, at least temporarily blocking state regulators from enforcing a cease and desist against Kalshi.
Notably, most of these contracts and cases were related to sports betting and not election-related betting, as Arizona’s case is.
In his statement, Mayes said, “Kalshi may brand itself as a ‘prediction market,’ but what it actually does is run an illegal gambling operation and take bets on the Arizona election.”
She added that state law prohibits both unlicensed bookmakers and betting on elections.
The charges escalate a growing legal battle between Kalshi and state regulators. The company sued Arizona on March 12 in a preemptive move, part of a broader strategy that has recently included lawsuits against Iowa and Utah, Mayes’ filing added. Arizona officials also criticized the approach, saying Kalshi is trying to circumvent state-level rules of the game by turning to federal courts.
“Kalshi makes a habit of suing states instead of following their laws,” Mayes said. “In the last three weeks alone, the company has filed lawsuits against Iowa and Utah, and now Arizona.”
Mayes criticized Kalshi, saying that instead of operating within the legal framework of Arizona’s, “Kalshi is running to federal court to try to avoid accountability.”
The filing also cited a recent federal court setback for Kalshi in Ohio, where a judge denied the company’s request for a preliminary injunction and affirmed the state’s authority to enforce its gambling laws.
Kalshi has positioned its event contracts as federally regulated derivatives rather than gaming products, a distinction now being tested across multiple jurisdictions.
