Arizona Attorney General Kris Mayes has filed criminal charges against prediction market platform Kalshi for allegedly operating an illegal gambling business in the state without a license and for campaigning.
The 20-count complaint, filed in Maricopa County court on Tuesday, accuses the company of engaging in unlicensed gambling activities, alleging that the site “accepted bets from Arizona residents on a wide variety 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 on the 2028 presidential race, the 2026 Arizona gubernatorial race, the 2026 Arizona Republican primary and the 2026 Arizona Secretary of State race.
This is the first time a state has pursued such charges against the company, according to the AZ Mirror, and marks a significant escalation in the battle between states and the prediction market industry.
“Kalshi may label itself as a ‘prediction market,’ but what it actually does is run an illegal gambling operation and take bets on Arizona elections, both of which violate Arizona law,” 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 technical misdemeanors. They follow a small wave of cease-and-desist letters, lawsuits and other official actions by states over Kalshi’s activities, with several officials complaining that the company is in violation of state gambling laws.
Conversely, prediction sites like Kalshi have argued that they are not in violation of state law because they are subject to federal regulation via the Commodity Futures Trading Commission.
Kalshi may be attacked left, right and centre, but the company has also taken its own, often pre-emptive, legal steps.
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Kalshi sued the Arizona Department of Gaming in federal court on March 12. The company’s lawsuit argued that Arizona’s attempted regulation intruded “on the exclusive authority of the federal government to regulate the trading of derivatives on exchanges.” Kalshi has also recently sued Iowa and Utah on similar grounds.
Mayes’ office claims the company is simply trying to avoid accountability.
“Kalshi makes a 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 framework established by states like Arizona, Kalshi is running to federal court to try to avoid accountability.”
Elisabeth Diana, Kalshi’s communications manager, called the Arizona charges “grossly flawed” and a matter of “gamesmanship” related to the company’s own lawsuits against the state.
“Four days after Kalshi filed suit in federal court, these charges were filed to bypass federal court and short-circuit the normal judicial process,” Diana said. “They are trying to prevent federal courts from evaluating the case based on the merits — whether Kalshi is subject to exclusive federal jurisdiction. These charges are meritless and we look forward to fighting them in court.”
Federal officials have signaled they are siding with the prediction industry, setting up a potential regulatory showdown between states and the federal bureaucracy. Michael Selig, chairman of the Commodity Futures Trading Commission, recently published an opinion piece in the Wall Street Journal accusing state governments of “leading legal attacks on the CFTC’s authority to regulate” such sites. Selig also argued that his agency would no longer “sit idly by while overzealous state governments” undermined the agency’s “exclusive jurisdiction” over the industry.