Arizona has filed twenty criminal counts against Kalshi, alleging operation of an illegal gambling business. The state accuses the platform of accepting unlicensed wagers on elections, sports, and individual performance-activities prohibited under Arizona law.
Attorney General Kris Mayes stated Arizona will not allow any company to place itself above state law. This is the first criminal prosecution of a prediction market platform by a U.S. state.
Kalshi denies the charges, asserting it operates as a CFTC-regulated financial exchange-not a gambling service. The company argues state-level enforcement undermines federal oversight and creates operational conflict across jurisdictions.
A federal judge recently dismissed Kalshi’s motion to block state prosecution, clearing the way for Arizona’s case to proceed in state court. Legal experts warn the outcome could reshape federal-state authority over fintech and prediction markets.