Arizona’s attorney general filed criminal charges against prediction market Kalshi, accusing him of operating an unlicensed gambling business and offering illegal bets on elections.
“Kalshi may call himself a ‘prediction market,’ but what he’s actually doing is running illegal gambling and betting on Arizona elections, both of which violate Arizona law,” Attorney General Chris Mayes said in a statement Tuesday.
While the Arizona case is the first time criminal charges have been filed against the company, several other US states have alleged that Kalshi Markets conducts illegal and unregulated sports betting.
“There’s clearly going to be a domino effect,” said Daniel Wallach, a lawyer specializing in gaming law. “These are the first criminal charges brought against Kalshi anywhere in the United States, but they may not be the last.”
“Unfortunately, a state can file criminal charges with paper arguments. States like Arizona want to individually regulate nationwide financial exchanges and are trying every trick in the book to do it,” Kalshi said in a statement.
Prediction market platforms like Kalshi offer bets on binary outcomes such as whether a particular team will win or lose a football match. Kalshi argued that these contracts should continue to be regulated as derivatives by the federal Commodity Futures Trading Commission, arguing that their regulatory status under the CFTC preempts state-level laws, allowing them to bypass states’ sports gambling bans or regulations.
