TLDR
- Arkansas Attorney General Tim Griffin filed a lawsuit against Kalshi on November 4, alleging illegal gambling.
- The lawsuit accuses Kalshi of offering sports and entertainment wagers without complying with Arkansas gambling laws.
- Arkansas seeks consumer restitution, civil penalties, unpaid taxes and court orders against the platform.
- Kalshi maintains that its event contracts fall under federal financial regulations rather than state gambling laws.
- Utah filed 14 criminal charges against Kalshi and its two executives on October 28.
Arkansas Attorney General Tim Griffin sued prediction market operator Kalshi on November 4, alleging that its platform offers illegal gambling to residents. The lawsuit targets KalshiEX LLC and Kalshi Inc. under Arkansas consumer protection law. The case was filed in Independence County.
Kalshi and Arkansas Clash Over Sports Wagers
Griffin argues that Kalshi lets customers risk money on sports, elections and entertainment without meeting state gambling requirements. The complaint points to contracts on University of Arkansas Razorbacks games as an example of betting that state law controls.
The state also alleges that Kalshi allows users aged 18 and older to trade these contracts. Griffin said the platform exposes customers to financial losses and problem gambling. Those claims remain allegations before the court.
Kalshi Cites Federal Trading Rules
Kalshi maintains that its event contracts are financial products overseen by the Commodity Futures Trading Commission, or CFTC. Its federal registration is central to its defense against state gambling claims. The agency also recently cleared stock-linked perpetual futures for regulated exchanges.
Arkansas rejects the argument that federal oversight exempts Kalshi from state rules. Griffin wants restitution for customers, civil penalties, unpaid taxes and a court order stopping conduct alleged to violate the law.
Utah Brings Criminal Case Against Kalshi
Arkansas joined other states challenging Kalshi’s business model. On October 28, Utah prosecutors filed 14 criminal charges against the company, chief executive Tarek Mansour and chief operating officer Luana Lopes Lara.
Utah alleges that an undercover investigator placed sports trades through the platform. The criminal case against Kalshi followed an earlier civil lawsuit seeking to stop the company from offering event contracts. Kalshi has rejected Utah’s allegations.
CFTC Disputes State Authority
The CFTC has challenged state efforts to regulate federally registered prediction exchanges. On October 27, it announced a lawsuit against Utah and said it had taken legal action against nine other states.
Chair Michael Selig said Congress gave the agency primary authority over these markets. The CFTC lawsuit against Utah seeks to block state enforcement involving federally regulated exchanges. The legal dispute remains unresolved across jurisdictions. Other state lawsuits also remain pending.
Griffin separately sued online gaming operator VGW on November 4. Arkansas alleges that its casino-style sites allow customers to redeem virtual gaming coins for cash, in violation of state gambling laws.
