Arizona Attorney General Files Criminal Charges Against Kalshi

^{Arizona Attorney General Kris Mayes believes Kalshi is running an illegal gambling operation. (Photo:  Annabelle Gordon / UPI/ Alamy Live News)} 

Arizona attorney general Kris Mayes filed criminal charges against the prediction market Kalshi on Tuesday, firing the latest salvo from state officials and regulators against the site.

In the complaint, which was filed in a Maricopa County court, Arizona listed 20 misdemeanor charges against Kalshi, accusing the company of taking illegal bets on elections and operating a gambling business in Arizona without a license.

Mayes: Kalshi is ‘Running an Illegal Gambling Operation’

Each charge is punishable by fines ranging from $10,000 to $20,000.

“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 in a statement. “No company gets to decide for itself which laws to follow.”

The charges include allegations that Kalshi is offering wagering on at least our different elections in Arizona, ranging from the 2028 presidential election to a Republican primary for this year’s gubernatorial race.

The lawsuit – and the arguments being made on both sides – mirror the fights that prediction markets are facing across the country as state regulators battle what they feel are unlicensed gaming operators.

Kalshi and other prediction markets are regulated by the Commodity Futures Trading Commission, a federal agency that regulates financial markets, including derivatives and swaps. That regulation, Kalshi says, puts it directly under federal authority, superseding state laws.

“States like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do it,” Kalshi said in a statement. “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.”

But regulators across the country have disagreed, saying that offering sports-based contracts is simply a way to dress up sports betting. And while Kalshi remains available in all 50 states currently, multiple states are pursuing injunctions to prevent them from offering contracts, with Nevada perhaps the closest to successfully doing so after a federal judge sent the dispute there back to state courts.

Prediction Markets Fighting Regulations, Accusations of Insider Trading

Meanwhile, Kalshi has gone on the offensive to slow these regulatory moves. Just days before Arizona filed its lawsuit, Kalshi filed preemptive civil actions against Arizona, Iowa, and Utah in the hopes of preventing efforts to kick the prediction market out of those states.

“Kalshi is making a habit of suing states rather than following their laws,” Mayes said. “Rather than work within the legal frameworks that states like Arizona have established, Kalshi is running to federal court to try and avoid accountability.”

Beyond the legal battles with state officials, Kalshi and other prediction platforms have been dogged by accusations of insider trading and manipulation on markets that cover everything from the weather to the war in Iran.

This week, a reporter for the Times of Israel named Emanuel Fabian said that he had received death threats over his report that an Iranian missile struck an open area outside Beit Shemesh, with Polymarket users who bet on whether or not Iran would successfully strike Israel on that date arguing with him over whether an explosion was caused by a missile or rather a fragment from one that was intercepted.

“The attempt by these gamblers to pressure me to change my reporting so that they would win their bet did not and will not succeed,” Fabian wrote in the Times of Israel. “But I do worry that other journalists may not be as ethical if they are promised some of the winnings.”