Arizona charged the prediction market operator Kalshi with 20 criminal counts, ranging from wagers accepted on Arizona men’s and women’s college basketball games, Super Bowl prop bets, and election wagering.
- Kalshi filed a preemptive lawsuit against the Arizona Department of Gaming last week.
- The State of Arizona sued Kalshi on 20 criminal counts.
- Unlike other states where it is unclear whether wagering on election outcomes is legal, Arizona explicitly forbids election wagering.
Well, it didn’t take long. In fact, it took less than a week after Kalshi filed a preemptive lawsuit against Arizona that the state fired back with a lawsuit of its own.
"Arizona will not be bullied into letting any company place itself above state law," Arizona Attorney General Kris Mayes said.
BREAKING: @AZAGMayes files 20 criminal misdemeanor charges against @Kalshi for "operating an illegal gambling business in Arizona" and "election wagering." @azfamily pic.twitter.com/YpeQLMk3Eh
The State of Arizona filed its suit in the Superior Court of Arizona in and for the County of Maricopa on Monday. On Tuesday, Arizona Attorney General Kris Mayes pulled no punches about the state’s motivation for the lawsuit.
"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," said Attorney General Mayes. "Rather than work within the legal frameworks that states like Arizona have established, Kalshi is running to federal court to try to avoid accountability."
Kalshi was one of the first prediction market to offer sporting event contracts across the United States, running afoul of states with legalized sports betting.
Kalshi does not have an Arizona sports betting license nor does it pay taxes on wagers like the states’ licensed sportsbooks. Prediction markets, however, feel they are not required to abide by state gambling laws since they are federally regulated by the Commodity Futures Trading Commission (CFTC).
Meanwhile, some states do not expressly forbid wagering on election results, something prediction markets have historically offered. In Arizona, however, election wagering is very clearly a criminal misdemeanor. So along with its chargers relating to sports betting, Arizona is taking Kalshi to task on its election-related contracts.
In Attorney General Mayes’ press release she alleged that Kalshi accepted wagers on a variety of events in violation of Arizona law, including "professional and college sporting contests, proposition bets on individual player performance, and whether the SAVE Act would become law. Among the charges are four counts of election wagering, including bets on the 2028 presidential race, the 2026 Arizona gubernatorial race, the 2026 Arizona Republican gubernatorial primary, and the 2026 Arizona Secretary of State race."
In Kalshi’s preemptive lawsuit against Arizona, it claimed that "there is a substantial risk that the Attorney General of Arizona will bring an enforcement action against Kalshi on behalf of the Arizona Department of Gaming with the intent to prevent Kalshi from offering event contracts for trading on its federally regulated exchange."
Kalshi was correct about the risk. But if Kalshi thought its preemptive lawsuit would stop Arizona’s enforcement efforts, it lost that bet.
The company responded to Arizona's legal action on Tuesday afternoon.
On Arizona:
These state-court charges are seriously flawed. It's gamesmanship.
Four days after Kalshi filed suit in federal court, these charges were filed to circumvent federal court and short-circuit the normal judicial process. They attempt to prevent federal courts from…
New chairman of the CFTC Michael Selig also weighed in in support of prediction markets.
The Arizona Attorney General today filed criminal charges against one of our registered exchanges related to prediction markets. This is a jurisdictional dispute and entirely inappropriate as a criminal prosecution. The @CFTC is watching this closely and evaluating its options.