By Jayujyoti Mullick
Prediction market platform Kalshi is facing criminal charges after Arizona Attorney General Kris Mayes filed a complaint alleging the company operated an illegal gambling business in the state without a license and engaged in election wagering.
The 20-count complaint, filed in Maricopa County court on March 17, accuses the company of engaging in unlicensed gambling. The charges allege that the platform “accepted bets from Arizona residents on a wide range of events,” including state elections, a practice that is illegal under Arizona law. The complaint charges KalshiEx LLC and Kalshi Trading LLC with four counts of election wagering. It also alleges that Kalshi accepted bets from Arizona residents on the 2028 presidential race, the 2026 Arizona gubernatorial race, the 2026 Arizona Republican gubernatorial primary, and the 2026 Arizona Secretary of State race.
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According to reports, this is the first time a state has pursued such criminal charges against the company, marking a significant escalation in the broader conflict between state regulators and the prediction market industry.
Attorney General Mayes stated, “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.”
Reports indicate that the charges are technically misdemeanours. They follow a recent surge of cease-and-desist letters and other enforcement actions from multiple states. Authorities have raised concerns that Kalshi’s activities generate numerous complaints and may be an attempt to bypass state gambling laws.
Mayes’ office has argued that the company is attempting to avoid accountability. “Kalshi is making a habit of suing states rather than following their laws. In the last three weeks alone, the company has filed lawsuits against Iowa and Utah, and now Arizona,” Mayes said in a statement. “Rather than work within the legal frameworks that states like Arizona have established, Kalshi is running to federal court to try to avoid accountability.”
In contrast, prediction market platforms like Kalshi maintain that they are not violating state law and instead fall under federal oversight through the Commodity Futures Trading Commission.
Earlier, on March 12, Kalshi sued the State of Arizona preemptively in federal court, seeking to challenge the state’s authority over its operations. Responding to this move, Mayes said, “No company gets to decide for itself which laws to follow.”
Kalshi also filed a lawsuit against the Arizona Department of Gaming on March 12, arguing that the state’s regulatory efforts intrude “into the federal government’s exclusive authority to regulate derivatives trading on exchanges.” The company has used similar arguments in its legal actions against Iowa and Utah.
Elisabeth Diana, head of communications at Kalshi, described Arizona’s criminal charges as “seriously flawed” and characterized them as an act of “gamesmanship” tied to the company’s earlier litigation. “Four days after Kalshi filed suit in federal court, these charges were filed to circumvent federal court and short-circuit the normal judicial process,” Diana said. “They attempt to prevent federal courts from evaluating the case based on the merits — whether Kalshi is subject to exclusive federal jurisdiction. These charges are meritless, and we look forward to fighting them in court.”