Arizona Attorney General Kris Mayes has filed criminal charges against prediction market operator Kalshi, alleging it ran an illegal gambling business in the state and unlawfully accepted wagers on elections.
The 20-count misdemeanor filing in Maricopa County Superior Court marks the first criminal case brought by a state against Kalshi.
The platform has been involved in a growing legal dispute over whether state gaming regulators can police prediction market operators offering event contracts.
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."
According to the filing, Kalshi accepted bets from Arizona residents on events including professional and college sports.
Prosecutors also alleged that it took bets on the 2028 presidential race, the 2026 Arizona gubernatorial race, the 2026 Arizona Republican gubernatorial primary and the 2026 Arizona secretary of state race.
Kalshi said the charges were based on "paper-thin arguments." It added that its business differs from sportsbooks and casinos and "should not be overseen by a patchwork of inconsistent state laws."
The supplier has argued that its event contracts fall under the exclusive jurisdiction of the Commodity Futures Trading Commission. Under President Donald Trump, the CFTC has supported prediction markets in disputes over whether their products amount to unlicensed gambling under state law.
The criminal filing came one day after Kalshi sued in federal court to stop Arizona from pursuing enforcement. US District Judge Michael Liburdi denied its request for a temporary restraining order.
Other states have already challenged Kalshi through civil action. Massachusetts, Nevada and Michigan have all filed lawsuits seeking to block the platform from offering sports event contracts.
In Massachusetts, a judge granted an injunction against Kalshi, although that ruling is currently on hold during the appeal process.
The Arizona case increases pressure on Kalshi as state authorities continue testing the limits of federal oversight in the prediction markets sector.
Earlier this month, Kalshi expanded its international reach through a partnership with XP International in Brazil. Under that agreement, Clear clients with international accounts can access Kalshi contracts, initially focused on financial and economic events traded in the US-regulated market.
No other state has filed criminal charges against Kalshi so far
