Kalshi faces criminal charges in Arizona over sports and election contracts

Arizona Attorney General Kris Mayes filed criminal charges against Kalshi Tuesday, charging the prediction markets platform with operating an unlicensed gambling business and offering election wagering in the state, actions she said violated the state’s laws.

Mayes charged KalshiEx LLC and Kalshi Trading LLC with 20 counts, alleging the platform accepted bets from Arizona on a wide range of events in violation of Arizona law, including sports and elections, like contracts betting on the outcomes of the 2028 presidential race and 2026 state gubernatorial race.

“Arizona law prohibits operating an unlicensed wagering business, and separately bans betting on elections outright,” 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 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 such as Arizona that continue to treat sports and election-related contracts.

“Sadly, a state can file criminal charges on paper thin 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 it. As other courts have recognized and the CFTC affirms, Kalshi is subject to federal jurisdiction. It’s different from what sportsbooks and casinos offer their customers, and it should not be overseen 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 found that sports-related conduct might be subject to 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 gambling, and not election-related bets, as Arizona’s case is.

In her statement, Mayes said, “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 added that state law prohibits both unlicensed wagering businesses and betting on elections outright.

The charges escalate a widening legal fight 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 litigation against Iowa and Utah, Mayes’ filing added. Arizona officials also criticized the approach, saying Kalshi is attempting to bypass state-level gambling rules by turning to federal courts.

“Kalshi is making a habit of suing states rather than 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 frameworks such as 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 firm’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 now being tested across multiple jurisdictions.