The web-based prediction market platform Kalshi is facing criminal charges brought by the state of Arizona for operating an alleged illegal gambling business, allowing users to bet on elections.
Arizona Attorney General Kris Mayes announced on Tuesday that her office filed criminal charges against KalshiEx LLC and Kalshi Trading LLC, accusing the company of operating an illegal gambling business without a license and unlawfully offering election wagering in the state.
According to Arizona's filing, the case includes 20 misdemeanor counts. Reuters reported that the criminal information was filed in Maricopa County Superior Court and alleges Kalshi accepted bets from Arizona residents on professional and college sports, as well as political contests, including the 2028 presidential race, the 2026 Arizona governor's race, the 2026 Arizona Republican gubernatorial primary, and the 2026 Arizona secretary of state race.
In the attorney general's statement, she said Kalshi may call itself a prediction market, but in practice is "running an illegal gambling operation and taking bets on Arizona elections," conduct her office says violates Arizona law. The state's move matters because it goes further than other recent actions against the company, which until now have largely been civil disputes over whether states can block Kalshi's sports and event contracts.
In an interview with KTAR News 92.3 Mayes said, "We allege a dramatic overreach by Kalshi in just completely trying to bypass our gaming laws...it's not fair to allow any corporation, no matter who they are, to violate our gaming laws...what we're seeing is this kind of insane situation where these prediction markets are allowing betting on everything."
We're seeing an "insane situation" in which prediction markets like Kalshi let people bet on anything from elections to wars, @AZAGMayes says.
— KTAR News 92.3 (@KTAR923) March 17, 2026
"Those things are just illegal in the state of Arizona," she tells @balin_om.
More details: https://t.co/TMPSoLDHFF pic.twitter.com/cd5uIVHaoS
Kalshi, based in New York, has rejected Arizona's position and says its contracts are not gambling products but event contracts traded on a federally regulated exchange. The company argues that those contracts fall under the exclusive jurisdiction of the Commodity Futures Trading Commission, or CFTC. In a statement reported by Reuters, Kalshi said Arizona's case rests on "paper-thin arguments" and accused states of trying to regulate "a nationwide financial exchange" through a patchwork of inconsistent laws.
In a federal complaint filed before Arizona announced the criminal case, Kalshi asked a judge to block state enforcement, arguing that Congress gave the CFTC exclusive authority over trading on federally approved exchanges. The complaint says Arizona officials had already signaled that they viewed Kalshi's offerings as illegal event wagering and could seek both civil and criminal penalties if the platform continued operating in the state.
However, the state's position is that Kalshi's markets, especially those tied to elections and sports, amount to wagering activity that requires a license under Arizona law. That dispute has played out elsewhere, too. Massachusetts, Nevada, and Michigan have filed civil lawsuits or enforcement actions to stop Kalshi from offering sports event contracts, while Arizona is the first to pursue a criminal case.
For now, Kalshi has not succeeded in stopping Arizona's action in federal court. Reuters reported that U.S. District Judge Michael Liburdi denied the company's request for a temporary restraining order one day before the criminal charges were announced.
