Kalshi’s legal woes mount as Arizona files first criminal charges for ‘illegal gambling business’

Arizona Attorney General Kris Mayes filed criminal charges against prediction market platform Kalshi for allegedly operating an illegal gambling business in the state without a license and for election betting.

He 20-count complaintfiled Tuesday in Maricopa County Court, accuses the company of engaging in unlicensed gambling activities, claiming 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 in the 2028 presidential race, the 2026 Arizona gubernatorial race, the 2026 Arizona gubernatorial Republican primary and the 2026 Arizona secretary of state race.

This is the first time a state has filed charges of this type against the company, according to Mirror AZand marks a significant escalation in the battle between the states and the prediction market industry.

“Kalshi may call himself a ‘prediction market,’ but what he is actually doing is running an illegal gambling operation and accepting bets on Arizona elections, which violate Arizona law,” said Attorney General Mayes. said in a statement. “No company can decide for itself which laws to follow.”

It’s worth noting that the charges are technically misdemeanors. They follow a small wave of cease and desist letters, demandsand other official actions by states on Kalshi’s activities, in which numerous officials have complained that The company is circumventing state gambling laws.

By contrast, prediction sites like Kalshi have argued that they do not violate state law because they are subject to federal regulation through the Commodity Futures Trading Commission.

Kalshi may be under attack left and right, but the company has also taken its own legal actions, often pre-emptive.

Kalshi sued the Arizona Department of Gaming in federal court on March 12. company demand He argued that Arizona’s regulatory efforts were encroaching on “the federal government’s exclusive authority to regulate derivatives trading on exchanges.” Kalshi also recently sued Iowa and Utah for similar reasons.

Mayes’ office maintains that the company is simply trying to avoid accountability.

“Kalshi is getting into the 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 established, Kalshi is running in federal court to try to avoid accountability.”

Elisabeth Diana, Kalshi’s chief communications officer, called Arizona’s criminal charges “seriously flawed” and a matter of “craftiness” related to the company’s own litigation against the state.

“Four days after Kalshi filed the lawsuit in federal court, these charges were filed to bypass the federal court and short-circuit the normal judicial process,” Diana said. “They are attempting to prevent federal courts from reviewing the case based on the merits, meaning whether Kalshi is subject to exclusive federal jurisdiction. These charges are baseless and we look forward to fighting them in court.”

Federal officials have signaled that they are siding with the prediction industry, creating a potential regulatory showdown between states and the federal bureaucracy. Michael Selig, chairman of the Commodity Futures Trading Commission, recently published and opinion article in the Wall Street Journal in which he accused state governments of having “launched legal attacks on the CFTC’s authority to regulate” such sites. Selig also stated that his agency would no longer “stand by while overzealous state governments” undermined the agency’s “exclusive jurisdiction” over the industry.