Kalshi has filed a lawsuit in the US District Court of Arizona, citing a “substantial risk” of enforcement action while naming Arizona Department of Gaming Director Jackie Johnson, Chief Law Enforcement Officer Douglas Jensen and Attorney General Kristin Mayes.
Johnson and the Arizona Department of Gaming previously issued cease-and-desist letters to Kalshi and Crypto.com in May 2025, as well as warned operators currently authorized to conduct business in the state of engaging in prediction market activity during September.
When reached out to for comment, the Arizona Department of Gaming told Global Gaming Insider the agency is "aware" of the lawsuit filed by Kalshi, but had no additional information to share at the time of writing.
Kalshi’s legal action in Arizona follows similar efforts recently made in Utah and Iowa, having also felt the need to take preemptive action against state regulators due to prior warnings on both accounts.
According to the lawsuit, Kalshi met with Iowa Attorney General Brenna Bird to hold discussions believed to be centered around a tax bill currently under consideration by state legislature, but were instead “greeted by a panel of attorneys…who proceeded to ask a series of pointed questions challenging whether Kalshi’s federally regulated offerings ran afoul of Iowa state law.”
Following the meeting, Kalshi reached out to representatives of the Iowa Attorney General for assurances she did not intend to pursue enforcement action against the operator.
Rather than provide such confirmation, the representative stated “we will not give any assurances about potential future enforcement.”
In Utah, Governor Spencer Cox publicly criticized CFTC Chairman Michael Selig over the legality of sports-related prediction markets, rejecting the CFTC’s position that such markets fall under federal derivatives regulation.
The operator included Cox’s social media post as supporting evidence in the federal lawsuit, also referencing an op-ed written by the Utah Governor in which he cited Kalshi by name.
Shortly after the Arizona lawsuit was filed, Wallach Legal Founder Daniel Wallach commented on the news through social media, having said, “Despite having the better of the legal arguments (by far), the States do themselves a disservice by allowing Kalshi to sue first in federal court and control the narrative by focusing on preemption, not legality of the contracts.”
Wallach also referenced regulators’ undefeated record against prediction market operators when being the first to file a lawsuit in state court.
Kalshi stated it intends to file a temporary restraining order motion in Arizona, as well as a preliminary injunction if Mayes fails to provide assurances that enforcement action will not be taken in the future.
Kalshi and Polymarket each filed emergency stay motions in Nevada federal court on March 3 to allow the respective legislative bodies ‘adequate’ time to consider ‘forthcoming’ stay motions from both operators
