Arizona Attorney General Kris Mayes announced her office has filed gambling and related criminal charges against the companies behind prediction markets platform Kalshi. The complaint alleges Kalshi operated an “illegal gambling business in Arizona without a license” and offered election wagering in violation of state law. Authorities say the platform allowed Arizona residents to bet on contracts tied to sports and state and federal elections.
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, both of which violate Arizona law. No company gets to decide for itself which laws to follow.”
The AG’s office said the charges followed Kalshi’s decision to file a preemptive lawsuit against Arizona “in an attempt to avoid accountability under Arizona law.” State authorities have pursued similar actions against companies behind other prediction markets, including Polymarket.
A Kalshi spokesperson told Cointelegraph that states are attempting to regulate a nationwide financial exchange and that Kalshi is subject to federal jurisdiction. The spokesperson argued the platform differs from sportsbooks and casinos and should not be regulated by a “patchwork of inconsistent state laws.”
Recent court rulings have produced mixed results. An Ohio judge last week denied Kalshi’s request for a preliminary injunction, finding the company did not prove its sports event contracts fall under the Commodity Futures Trading Commission’s (CFTC) exclusive jurisdiction. Conversely, a federal judge in Tennessee in February blocked state authorities from enforcing gambling laws against Kalshi.
At the federal level, CFTC Chair Michael Selig, now the sole commissioner, has publicly defended prediction market platforms and signaled the CFTC would protect them from state-level enforcement. Selig recently opened a proposed rule for public comment on how the Commodity Exchange Act should apply to prediction markets, a move that could shape future regulation and enforcement.