Lynnae Williams Journalist
Lynnae is a journalist covering the intersection of technology, culture, and gambling. She has more than five years of experience as a writer and editor, with bylines at SlashGear and MakeUseOf. On the iGaming side,...
Read Full BioIn a major escalation in the fight over the legality of prediction markets, Arizona Attorney General Kris Mayes has filed criminal charges against Kalshi, accusing the company of running an illegal, unlicensed gambling operation in the state and taking bets on elections.
The move makes Arizona the first state to bring criminal charges against the CFTC-regulated prediction market operator, significantly raising the legal stakes for the exchange as it faces legal challenges in multiple states.
Announcing the case on Tuesday, Mayes 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.” She added: “Arizona will not be bullied into letting any company place itself above state law.”
The filing of misdemeanor charges comes just days after Kalshi sued Arizona in federal court to block state enforcement before it could begin. However, the state’s decision to pursue criminal charges may have thrown a wrench into that strategy.
In an order entered on March 17, United States District Judge Michael Liburdi denied Kalshi’s request for a temporary restraining order, set a briefing schedule on its preliminary injunction request, and ordered the company to explain why the court shouldn’t abstain, given Arizona’s newly filed criminal charges.
Arizona’s Criminal Case Targets Sports, Parlays & Election Markets
The 20-count criminal information, filed in Maricopa County Superior Court on March 16, accuses Kalshi’s Delaware-registered entities of violating Arizona’s wagering and election-betting laws. Out of the 20 counts, 16 allege betting and wagering violations, while four allege election wagering violations.
In the filing, the state documents a series of wagers prosecutors say Kalshi accepted from Arizona residents, including bets on NFL and college basketball games, player props, parlays, and whether the SAVE Act would become law.
The complaint also singles out four election-related markets that Kalshi offered: the 2028 presidential race, the 2026 Arizona governor’s race, the 2026 Arizona Republican gubernatorial primary, and the 2026 Arizona secretary of state race.
Among the examples listed in the information are an allegation that Kalshi “accepted a $2 bet on whether a Republican would win the 2026 election for Governor of Arizona” and another alleging it “accepted a $1 bet on whether Andy Biggs would win the 2026 Republican Party primary election for Governor nominee in the State of Arizona.”
Kalshi didn’t waste any time responding to the allegations, pushing back hard against them via its Kalshi News account on X. In the statement, the company said: “These state-court charges are seriously flawed. It’s gamesmanship.”
Kalshi argued that the charges were filed four days after it sued in federal court “to circumvent federal court and short-circuit the normal judicial process,” adding that the case should turn on “whether Kalshi is subject to exclusive federal jurisdiction.” The company said the charges are “meritless” and that it looks forward to fighting them in court.
Criminal Filing Raises Stakes in Kalshi’s Legal Fight
The Arizona case comes as Kalshi is already facing legal challenges on multiple fronts over whether its event contracts fall under the CFTC’s exclusive jurisdiction or can be blocked under state gambling law. Arizona’s case stands out because it moves that fight to criminal court.
CFTC Chairman Mike Selig, who has taken an increasingly public and assertive stance in defense of the agency’s authority over prediction markets, criticized the prosecution in a statement posted on X:
“The Arizona Attorney General today filed criminal charges against one of our registered exchanges related to prediction markets. This is a jurisdictional dispute and entirely inappropriate as a criminal prosecution. The CFTC is watching this closely and evaluating its options.”
In his own post on X, Kalshi CEO Tarek Mansour piggybacked on the chairman’s comments, saying, “I believe in the rule of law.”
Sports betting and gaming attorney Daniel Wallach wrote on X that the abstention question raised by the Arizona judge could prove especially important. He explained that the Younger doctrine generally prevents federal courts from stepping into ongoing state criminal cases.
If that doctrine applies here, it could make it harder for Kalshi to keep the dispute in federal court. In Wallach’s words, “Arizona has cracked the code.”
If Arizona is successful in forcing the issue, other states may see a path to using criminal enforcement against Kalshi, too.
