Arizona Attorney General Kris Mayes has pressed charges against prediction market platform Kalshi, accusing it of operating an illegal gambling business without a license and engaging in election wagering in the state.
The 20-count complaint filed in Maricopa County court alleges that Kalshi conducted unlicensed gambling activities by accepting bets from Arizona residents on various events, including state elections, which is illegal in Arizona. The charges include four counts of election wagering for taking bets on the 2028 presidential race, the 2026 Arizona gubernatorial and Republican gubernatorial primary races, and the Arizona secretary of state race.
This marks the first instance of such charges against Kalshi by a state and represents a heightened conflict between states and the prediction market sector.
Attorney General Mayes stated that although Kalshi presents itself as a “prediction market,” it is essentially running illegal gambling operations and election betting in violation of Arizona law. “No company gets to decide for itself which laws to follow,” Mayes said.
The charges are misdemeanors following a wave of cease-and-desist letters, lawsuits, and other state actions against Kalshi, with officials accusing the company of bypassing state gambling laws.
Conversely, Kalshi and similar sites assert they’re under federal regulation by the Commodity Futures Trading Commission (CFTC) and not violating state laws.
Despite facing numerous legal challenges, Kalshi has also taken legal action of its own. It recently sued Arizona’s Department of Gaming in federal court, arguing that Arizona’s efforts infringed on federal government authority to regulate derivatives trading.
Mayes’ office contends the company is dodging legal responsibility. “Kalshi is making a habit of suing states rather than following their laws,” Mayes remarked, noting Kalshi’s recent lawsuits against Iowa, Utah, and Arizona. “Kalshi is running to federal court to try to avoid accountability.”
Elisabeth Diana, Kalshi’s communications head, labeled the Arizona charges as “seriously flawed” and a tactic to undermine their federal lawsuit against the state. Diana criticized the timing of the charges as an attempt to bypass federal courts and short-circuit the judicial process.
Federal authorities seem to support the prediction industry’s stance, hinting at a possible regulatory clash between state and federal authorities. Michael Selig, chair of the CFTC, published an op-ed criticizing state governments for legal actions against the CFTC’s regulatory authority over such sites, asserting that his agency will not allow states to challenge its exclusive jurisdiction.