Arizona Attorney General Kris Mayes filed criminal charges against the prediction market platform Kalshi for allegedly operating an illegal gambling business in the state without a license and for election betting.
THE Complaint 20 numbersfiled in Maricopa County court on Tuesday, accuses the company of engaging in unlicensed gambling activities, alleging that the site “accepted bets from Arizona residents on a wide range of events,” including state elections, a practice that is illegal in arizona. The complaint charged Kalshi with four counts of election betting for accepting bets from Arizona residents on the 2028 presidential race, the 2026 Arizona gubernatorial election, the 2026 Arizona Republican primary and the 2026 Arizona secretary of state race.
This is the first time a state has pursued such charges against the company, according to AZ Mirrorand marks a major escalation in the battle between states and the prediction market industry.
“Kalshi may be labeled a ‘prediction market,’ but what she is actually doing is running an illegal gambling operation and betting on Arizona elections, which violate Arizona law,” said Attorney General Mayes. he said in a statement. “No company can decide for itself which laws to follow.”
It is worth noting that the charges are technical misdemeanors. They follow a small wave of cease and desist letters, lawsuitsand other official actions by states regarding Kalshi’s activities, in which many officials have been involved complained that the company is in violation of state gaming laws.
Instead, prediction sites like Kalshi have argued that they are not in violation of state law because they are subject to federal regulation through the Commodity Futures Trading Commission.
Kalshi may be attacked left, right and centre, but the company has also taken its own, often preemptive, legal action.
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Kalshi sued the Arizona Department of Gaming in federal court on March 12 company lawsuit argued that Arizona’s regulatory efforts intruded “on the exclusive authority of the federal government to regulate derivatives trading on exchanges.” Kalshi also recently sued Iowa and Jute for similar reasons.
Mayes’ office maintains the company is simply trying to avoid accountability.
“Kalshi makes a habit of suing states instead of following their laws. In the last three weeks alone, the company has filed lawsuits against Iowa and Utah, and now Arizona,” Mayes said in a statement. “Instead of working within the legal frameworks that states like Arizona have created, Kalshi is running to federal court to try to avoid accountability.”
Elisabeth Diana, Kalshi’s chief communications officer, called Arizona’s criminal charges “severely flawed” and a “game” related to the company’s own lawsuit against the state.
“Four days after Kalsi filed suit in federal court, these charges were filed to bypass federal court and short-circuit the normal court process,” Diana said. “They are trying to prevent the federal courts from evaluating the case on the merits — whether Kalshi is subject to exclusive federal jurisdiction. These charges are baseless and we look forward to facing them in court.”
Federal officials have signaled they are siding with the forecasting industry, setting up a potential regulatory showdown between states and the federal bureaucracy. Michael Selig, chairman of the Commodity Futures Trading Commission, recently posted an op-ed in the Wall Street Journal in which he accused state governments of “conducting legal attacks on the CFTC’s authority to regulate” such sites. Selig also claimed that his agency would no longer “sit idly by while overzealous governments” undermined the agency’s “exclusive jurisdiction” in the industry.
