Arizona Attorney General Kris Mayes filed criminal charges against Kalshi on Tuesday, accusing the prediction markets platform of operating an unlicensed gambling business and offering election betting in the state, actions she said violated state 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, such as contracts betting on the results of the 2028 presidential race and the state’s 2026 gubernatorial race.
“Arizona law prohibits operating an unlicensed betting business and separately prohibits betting on elections,” the attorney general said in a statement.
These accusations come just days after the Commodity Futures Trading Commission (CFTC) signaled a more favorable federal stance toward prediction markets, issuing new guidance and launching a rulemaking process under Chairman Mike Selig.
This effort asserted the CFTC’s “exclusive jurisdiction” over event contracts and defined platforms like Kalshi as regulated derivatives sites rather than gambling operators, creating a direct conflict with states like Arizona that continue to process contracts related to sports and elections.
“Unfortunately, a state can file criminal charges based on flimsy arguments,” a spokesperson for Kalshi said in a statement. “States like Arizona want to individually regulate financial exchanges nationwide and are trying every trick they can to do so. As other courts have recognized and as the CFTC asserts, Kalshi is subject to federal jurisdiction. This is 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 were subject to the state’s gambling regulators. A Massachusetts state court also held that sports-related conduct may be subject to that state’s regulations. A federal judge in Tennessee ruled the opposite way earlier this year, at least temporarily blocking state regulators from imposing a ceasefire against Kalshi.
Notably, most of these contracts and deals were related to sports gambling, not election-related betting, as is the case in the Arizona case.
In his statement, Mayes said, “Kalshi may present itself as a ‘prediction market,’ but what it really does is run an illegal gambling operation and take bets on elections in Arizona.”
She added that state law prohibits both unlicensed betting businesses and betting on elections.
The accusations escalate a widening legal fight between the Kalshi and state regulators. The company sued Arizona on March 12 as a preemptive measure, part of a broader strategy that has recently included litigation against Iowa and Utah, Mayes’ filing adds. Arizona officials have also criticized this approach, saying Kalshi is trying to circumvent the state-level playing field by turning to the federal courts.
“Kalshi makes 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 legal frameworks such as Arizona’s, “Kalshi is going to federal court to try to avoid accountability.”
The filing also cited a recent setback in federal court for Kalshi in Ohio, where a judge denied the company’s request for a preliminary injunction and upheld the state’s authority to enforce its gambling laws.
Kalshi has positioned its event contracts as federally regulated derivatives rather than gaming products, a distinction currently being tested in several jurisdictions.
