Arizona has become the first U.S. state to bring criminal charges against prediction market platform Kalshi, accusing it of operating an unlicensed gambling business within state borders.
Filed in state court, the case includes 20 misdemeanor counts against Kalshi and its trading arm, Kalshi Trading LLC. Authorities allege the company accepted wagers from Arizona residents on professional and college sports, individual player performances, and even political outcomes such as the 2028 U.S. presidential election.
The move follows a cease-and-desist order issued months earlier by the Arizona Department of Gaming, which sought to halt Kalshi’s sports-related event contracts in the state.
Arizona Attorney General Kris Mayes stated that the company’s operations violate state law, emphasizing that labeling itself as a “prediction market” does not exempt it from gambling regulations. “No company gets to decide for itself which laws to follow,” Mayes said.
Kalshi strongly rejected the allegations, arguing that its platform operates as a federally regulated financial exchange rather than a sportsbook. The company also criticized what it described as inconsistent, state-by-state enforcement efforts, warning that such an approach could disrupt nationwide financial markets.
The legal battle intensified after a federal judge denied Kalshi’s request to temporarily block Arizona regulators from enforcing state betting laws. The court has asked the company to justify why the case should proceed at the federal level despite ongoing criminal proceedings in state court.
Arizona’s action marks a significant escalation compared to other states like Maryland, Ohio, Massachusetts, and Nevada, which have pursued civil measures or issued warnings. With more than 20 related lawsuits unfolding across the U.S., legal experts expect the broader question of regulating prediction markets to eventually reach the Supreme Court.