Arizona hits Kalshi with first US criminal charges
Table of contents
- Arizona Attorney General Kris Mayes filed 20 misdemeanor counts against Kalshi on March 17, making the state the first in the US to bring criminal charges against a prediction market platform.
- The complaint alleges Kalshi accepted unlicensed wagers from Arizona residents on sports, elections, and legislation, including markets on the 2028 presidential race and two 2026 Arizona statewide races.
- Kalshi dismissed the charges as meritless and CFTC Chairman Michael Selig called the prosecution “entirely inappropriate,” signaling a deepening federal-state jurisdictional clash.
Arizona has become the first US state to file criminal charges against a prediction market company, escalating a widening legal battle over the fundamental question of how platforms like Kalshi should be classified under US law.
The 20-count criminal complaint, filed against KalshiEx LLC and Kalshi Trading LLC, alleges the New York-based platform accepted wagers from Arizona residents on a range of events that violate state law, including professional and college sporting contests, proposition bets on individual player performance, and whether the SAVE Act would become law.
The full filing is available via the Arizona Attorney General’s Office.
Election betting at center
Among the 20 charges are four counts of election wagering, covering markets on the 2028 presidential race, the 2026 Arizona gubernatorial race, the 2026 Arizona Republican gubernatorial primary, and the 2026 Arizona Secretary of State race.
Arizona law prohibits operating an unlicensed wagering business and separately bans betting on elections outright.
Kris Mayes, Attorney General of Arizona, said:
“Kalshi may brand itself as a ‘prediction market,’ but what it’s actually doing is running an illegal gambling operation and taking bets on Arizona elections, both of which violate Arizona law. No company gets to decide for itself which laws to follow.”
The 20 Class 1 misdemeanor charges are punishable by fines of $10,000 to $20,000. The Arizona action is not in civil court, so no enforcement action is currently being sought to shut Kalshi down within Arizona state lines.
The criminal case marks a new front in a high-stakes legal battle over the regulatory treatment of prediction markets and their relationship to existing gambling frameworks. There are already more than 20 civil lawsuits related to Kalshi’s legal status across multiple US states.
Federal-state standoff
Kalshi moved preemptively before the charges landed. On March 12, Kalshi sued the State of Arizona in an attempt to forestall accountability under state law. A US District Judge denied Kalshi’s request for a temporary block on the same day charges were filed and ordered the company to demonstrate why the case should remain in federal court given the new state charges.
The platform rejected the criminal complaint outright. A Kalshi spokesperson said:
“Sadly, a state can file criminal charges on paper thin arguments. States like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do it. As other courts have recognized and the CFTC affirms, Kalshi is subject to federal jurisdiction. It’s different from what sportsbooks and casinos offer their customers, and it should not be overseen by a patchwork of inconsistent state laws.”
CFTC Chairman Michael Selig, the sole sitting commissioner on the five-seat federal agency, weighed in on social media, calling the case ‘a jurisdictional dispute and entirely inappropriate as a criminal prosecution’ and stating the agency is ‘watching this closely and evaluating its options.’
The Trump administration has embraced online prediction markets and pledged to defend their right to operate in court. The CFTC’s current posture stands in contrast to the Biden era, when the agency initiated a rulemaking process to prohibit election-related prediction markets. That proposed ban was withdrawn earlier this year by Selig.
Judges in Nevada and Massachusetts issued early rulings in favor of states seeking to restrict the platform, while courts in New Jersey and Tennessee ruled in Kalshi’s favor.
With the CFTC firmly backing federal jurisdiction and states pressing forward with increasingly aggressive enforcement, the Arizona case is set to become a defining moment for the prediction market industry.
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About the author
Bianca Máthe
Bianca Mathe joined the iGaming industry in 2018 and has since built extensive experience across multiple verticals, working with international gaming organizations on editorial, marketing, and media strategy. She brings a strong understanding of the regulatory, commercial, and technological forces shaping the global iGaming sector.
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