Arizona Files 20 Criminal Counts Against Prediction Market Kalshi

Arizona Attorney General Kris Mayes has filed 20 criminal counts against prediction market operator Kalshi, alleging the platform ran an unlicensed gambling business and accepted illegal election wagers from residents of the state. The charges, announced Tuesday, mark one of the most aggressive state-level actions yet against the rapidly growing prediction markets industry.

The counts target both KalshiEx LLC and Kalshi Trading LLC, accusing the companies of taking bets from Arizona users on a range of events — including the outcome of the 2028 presidential race and the 2026 state gubernatorial contest — in violation of state statutes that prohibit both unlicensed wagering operations and election betting outright. "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," Mayes said in a statement.

The timing underscores a deepening tension between state gambling regulators and the federal government. Just days before the Arizona charges, the Commodity Futures Trading Commission under Chairman Mike Selig issued new guidance asserting "exclusive jurisdiction" over event contracts and launched a rulemaking process that would treat platforms like Kalshi as regulated derivatives venues rather than gambling operators. That framework directly contradicts Arizona's position and sets the stage for a prolonged jurisdictional battle.

Kalshi pushed back forcefully, calling the charges built on "paper thin arguments" and arguing that its platform is a federally regulated financial exchange, not a sportsbook or casino. "States like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do it," a company spokesperson said. The firm had preemptively sued Arizona on March 12, part of a broader litigation strategy that has also included recent lawsuits against Iowa and Utah. Mayes criticized that approach, saying "Kalshi is making a habit of suing states rather than following their laws."

The legal landscape remains fractured. A federal judge in Nevada ruled last year that Kalshi's sports-related contracts fall under state gaming authority, while a Tennessee federal court temporarily blocked state regulators from enforcing a cease-and-desist order against the company. An Ohio court recently denied Kalshi's request for a preliminary injunction, affirming the state's power to enforce its gambling laws. What distinguishes the Arizona case is its focus on election contracts — not just sports wagering — raising novel questions about the limits of both state authority and federal preemption in one of fintech's most contested regulatory frontiers.