TLDR
- Arizona AG Kris Mayes filed 20 criminal counts against prediction market platform Kalshi on Tuesday
- Kalshi is accused of running an unlicensed gambling business and taking illegal election bets in Arizona
- Kalshi argues it falls under federal jurisdiction via the CFTC, not state gambling laws
- Courts have ruled differently across states — Tennessee blocked enforcement, Ohio sided with the state
- The CFTC is currently pushing a new rule asserting federal authority over prediction markets
Arizona Attorney General Kris Mayes filed 20 criminal charges against prediction market platform Kalshi on Tuesday, accusing the company of operating an unlicensed gambling business in the state and allowing residents to bet on elections.
BREAKING: Arizona authorities have filed criminal charges against Kalshi for allegedly operating an illegal gambling business and unlawfully allowing people to place bets on elections.
— More Perfect Union (@MorePerfectUS) March 17, 2026
The charges target two Kalshi entities — KalshiEx LLC and Kalshi Trading LLC. The AG’s office says the platform let Arizona users bet on events including the 2028 presidential race and the 2026 Arizona gubernatorial race.
“Kalshi may brand itself as a ‘prediction market,’ but what it’s actually doing is running an illegal gambling operation,” Mayes said in a statement. She added that Arizona law bans both unlicensed wagering and election betting outright.
Kalshi fired back, calling the charges “paper-thin.” The company says it operates as a federally regulated derivatives exchange under the oversight of the Commodity Futures Trading Commission, not as a gambling platform.
“States like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do it,” a Kalshi spokesperson told Cointelegraph.
The charges came just days after Kalshi filed a preemptive lawsuit against Arizona on March 12. This is part of a broader legal strategy the company has used against multiple states. In recent weeks, Kalshi has also filed lawsuits against Iowa and Utah.
Mayes criticized that approach directly. “Kalshi is making a habit of suing states rather than following their laws,” she said.
The Federal vs. State Divide
The core dispute is whether Kalshi’s event contracts are gambling products under state law or regulated financial instruments under federal law.
The CFTC, currently led by Chair Michael Selig, has taken the position that it holds “exclusive jurisdiction” over event contracts. Selig recently opened a public comment period on a proposed rule that would formally apply the Commodity Exchange Act to prediction markets.
But state courts have not been uniform. A federal judge in Tennessee temporarily blocked Arizona-style enforcement earlier this year. A federal judge in Nevada ruled that Kalshi’s sports contracts are subject to state gaming rules. A Massachusetts court reached a similar conclusion.
In Ohio, a judge last week denied Kalshi’s request for a preliminary injunction, finding the company had not shown that its sports event contracts fall under the CFTC’s exclusive authority.
Where Things Stand Now
The Arizona case is somewhat different from the others. Most prior legal fights focused on sports betting contracts. Arizona’s charges also include election wagering, which the state bans outright.
Kalshi has not backed down from its federal jurisdiction argument. The company maintains that prediction markets are a different product than what sportsbooks and casinos offer.
The CFTC is expected to finalize its public comment period on the proposed prediction market rule in the coming weeks.
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