The state of Arizona sues the prediction platform Kalshi for operating illegally, escalating state-level regulatory clash

March 18, Arizona Attorney General Kris Mayes on Tuesday filed criminal charges against prediction market platform Kalshi, accusing it of operating illegal betting services in the state—including allowing users to wager on sports events and election outcomes. In a statement, Mayes said Kalshi, despite positioning itself as a "prediction market," was actually running an illegal gambling business and letting Arizona residents bet on state elections, violating local laws. "No company gets to pick and choose which laws to follow." Prosecution documents show Kalshi faces 20 total criminal charges, including counts of letting Arizona residents wager on professional and college sports, player performance, and election results. Four of the charges are election-related, covering the 2028 U.S. presidential race, 2026 Arizona gubernatorial election, 2026 Republican gubernatorial primary, and 2026 secretary of state election. Kalshi, for its part, called the charges "seriously flawed" and labeled the attorney general’s actions "political maneuvers." The platform has long argued its event contracts fall under the Commodity Exchange Act, should be regulated by the Commodity Futures Trading Commission (CFTC), and that federal oversight preempts state law. Kalshi now faces similar regulatory hurdles in states like Ohio and Tennessee, as the legal debate over whether prediction markets qualify as gambling intensifies.