Arizona Files Criminal Charges Against Kalshi
State Is First To File Criminal Charges Against A Platform
In the ongoing battle between state gambling regulators and prediction markets, Arizona took a different approach. Unlike other jurisdictions, Arizona filed criminal charges against Kalshi.
Arizona became the first state to file criminal charges against a prediction market operator.
Attorney General Kristin Mayes filed charges on Monday in Maricopa County. She alleged the company operates an unlicensed gambling business and takes illegal wagers on elections.
“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, both of which violate Arizona law,” Mayes said. “No company gets to decide for itself which laws to follow.”
‘Paper Thin Arguments’
This is just the latest move between states and prediction market firms since the platforms began branching out into sports event contracts in 2025.
Mayes filed 20 misdemeanor charges against the company, with fines ranging from $10,000 to $20,000. No enforcement action has yet been spelled out, and the state hasn’t made a move against Kalshi in civil court.
Prediction firms have argued that their offerings are different from traditional sports betting and solely regulated by the Commodity Futures Trading Commission (CFTC), not state gaming regulators.
“Sadly, a state can file criminal charges on paper thin arguments,” Kalshi told NBC News. “States like Arizona want to individually regulate a nationwide financial exchange and are trying every trick in the book to do it.
“As other courts have recognized and the CFTC affirms, Kalshi is subject to federal jurisdiction. It’s different from what sportsbooks and casinos offer their customers, and it should not be overseen by a patchwork of inconsistent state laws.”
Court Battles Continue
Kalshi and companies like Polymarket have faced varying degrees of success in court so far. One of the latest saw a federal judge in Ohio rule that Kalshi must follow state gaming laws.
In January, a state judge in Massachusetts also granted a preliminary injunction against Kalshi, barring it from offering sports contracts in the state. In one of the more recent moves against the industry, regulators in Tennessee sent cease-and-desist letters to three prediction market companies.
Federal lawmakers have also been critics of the industry. In September, several legislators sent a letter to the CFTC calling for reform. The legislators raised questions about whether the contracts were simply end-runs around state sports betting laws. They pointed to a lack of compliance with betting age requirements and other rules that legal sportsbooks must adhere to.
Former Trump White House Chief of Staff Mick Mulvaney recently said the platforms are more like traditional gambling than actual investing. He said prediction markets should be governed by state gaming regulators rather than by the CFTC.
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