Arizona Attorney General Kris Mayes filed criminal charges against Kalshi on Tuesday, accusing the prediction markets platform of operating an unlicensed gambling business and offering election betting in the state, actions she said violated state laws.
Mayes charged KalshiEx LLC and Kalshi Trading LLC with 20 counts, alleging that the platform accepted bets from Arizona on a wide range of events in violation of Arizona law, including sports and elections, such as betting contracts on the results of the 2028 presidential race and the 2026 state gubernatorial race.
“Arizona law prohibits operating a gambling business without a license and, separately, directly prohibits betting on elections,” the attorney general said in a statement.
The charges come just 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 its chairman Mike Selig.
That effort asserted the CFTC’s “exclusive jurisdiction” over event contracts and frames platforms like Kalshi as regulated derivatives venues rather than gambling operators, setting up a direct clash with states like Arizona that continue to deal with contracts related to sports and elections.
“Unfortunately, a state can bring criminal charges based on flimsy arguments,” a Kalshi spokesperson 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 affirms, Kalshi is subject to federal jurisdiction. It is different from what sportsbooks and casinos offer their customers, and should not be policed by a patchwork of inconsistent state laws.”
Different courts have ruled in different ways 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 gaming regulators. A Massachusetts state court similarly determined that sports-related conduct could be subject to state regulations in that state. A federal judge in Tennessee ruled the opposite 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 electoral betting, as is the case in Arizona.
In his statement, Mayes said, “Kalshi may brand himself as a ‘prediction market,’ but what he is actually doing is running an illegal gambling operation and accepting bets on the Arizona elections.”
He added that state law prohibits both unlicensed gambling businesses and direct betting on elections.
The charges intensify a growing legal fight between Kalshi and state regulators. The company sued Arizona on March 12 in a preemptive measure, part of a broader strategy that recently included litigation against Iowa and Utah, Mayes’ filing adds. Arizona officials also criticized the approach, saying Kalshi is trying to circumvent state-level gaming rules by going to federal courts.
“Kalshi is getting into the 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 legal frameworks like Arizona’s, “Kalshi is running in federal court to try to avoid accountability.”
The filing also cited a recent setback in federal court 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 gambling products, a distinction that is now being tested in multiple jurisdictions.
