Arizona Attorney General Kris Mayes filed 20 criminal misdemeanor counts against KalshiEx LLC and Kalshi Trading LLC on Tuesday, accusing the prediction market platform of operating an unlicensed gambling business and accepting illegal election wagers from Arizona residents.
Arizona appears to be the first state to pursue criminal - as opposed to regulatory or civil - charges against Kalshi, escalating a multi-state legal conflict over whether federally regulated event contracts are subject to state gambling laws.
The charges were filed in Maricopa County Superior Court, five days after Kalshi preemptively sued Arizona on March 12.
Potential penalties reach $20,000 per sports wager count and $10,000 per election wagering count.
What Arizona Charges
The 20-count information alleges Kalshi accepted bets on professional and college sports, individual player performance props, and whether federal legislation including the SAVE Act would become law.
Four counts specifically target election wagering - on the 2028 presidential race, the 2026 Arizona gubernatorial race, the 2026 Arizona Republican gubernatorial primary, and the 2026 Arizona Secretary of State race, all prohibited under state law.
"Kalshi may brand itself as a 'prediction market,' but what it's actually doing is running an illegal gambling operation," Mayes said.
Kalshi dismissed the case as built on "paper-thin arguments," saying its platform "should not be overseen by a patchwork of inconsistent state laws."
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Federal vs. State Collision
Kalshi argues its contracts fall under the Commodity Exchange Act and CFTC jurisdiction, which it contends supersedes state law. CFTC Chairman Mike Selig has publicly backed that position, recently co-authoring an amicus brief supporting Kalshi's operations in Nevada and committing the agency to clearer prediction market rules.
Courts have split. Last week, a federal judge in Ohio denied Kalshi's request for a preliminary injunction, with Chief Judge Sarah D. Morrison ruling that Kalshi's operational concerns were "dwarfed by Ohio's interest in exercising its police power."
A Tennessee federal court ruled the opposite, at least temporarily blocking state regulators from enforcing a cease-and-desist against the company.
Kalshi has also filed suits against Iowa and Utah. Separately, an Argentine court on Tuesday ordered nationwide blocking of Polymarket, citing concerns the platform operates as an unlicensed betting service.
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