Kalshi co-founder Tarek Mansour called Arizona’s criminal case against the company a “total overreach,” calling the move an attack on a federally regulated exchange rather than a standard gambling enforcement action.
Mansour said the charges “have nothing to do with gambling or merits” and argued that Arizona is trying to short-circuit a broader legal battle over who controls prediction markets. Speaking to Bloomberg, he said Kalshi would continue to defend the company even as the legal battle drags on.
Kalshi did not respond to CoinDesk’s request for comment.
Arizona Attorney General Kris Mayes filed 20 counts against Kalshi this week, accusing the company of operating an illegal gaming business and offering election betting in the state.
His office said Arizona law prohibits both unlicensed betting operations and election betting.
Kalshi allows users to trade contracts tied to real-world outcomes such as elections, sports and economic data. The company says these products are event-driven contracts overseen by the Commodity Futures Trading Commission (CFTC), which recently signaled a more favorable federal stance toward these platforms. Kalshi, along with Polymarket, accounts for the lion’s share of prediction market activity, accounting for over 90% of notional volume, according to Dune data.
In a social media post, CFTC Chairman Mike Selig called the matter a jurisdictional conflict and said the criminal prosecution was “totally inappropriate.” He said the agency is closely monitoring and evaluating its options.
The Arizona Attorney General today filed criminal charges against one of our registered exchanges related to prediction markets. This is a jurisdictional conflict that is completely inappropriate as a criminal prosecution. THE @CFTC monitors the situation closely and evaluates its options.
– Mike Selig (@ChairmanSelig) March 17, 2026
State officials in Arizona and elsewhere have argued that some of them are more like gambling and should fall under state gaming rules.
This division now finds itself at the center of a larger national fight involving various states, including New York, Tennessee and Massachusetts. Until now, most of the state’s actions against Kalshi have relied on cease and desist orders, requests for injunctions or civil suits. The Arizona case goes further by bringing criminal charges.
“It’s not at all surprising that states are using new tools to try to cool federally regulated markets,” Aaron Brogan, founder and general counsel of Brogan Law PLLC, told CoinDesk. “Because there is a fundamental conflict between states, which regulate and derive tax revenue from state-regulated gambling markets, and those federally regulated markets which are outside of state control.”
For Brogan, the question ultimately is whether or not federal law applies, which ultimately means, “this is a dispute between the federal government and the state government and that’s where it should be decided.”
