Summary
- Kalshi hit with a criminal case in Arizona, its first in any court in the United States
- The complaint alleges Kalshi is running an illegal gambling business in the state, and comes days after Kalshi filed a complaint of its own
- The present development raises the stakes significantly for Kalshi, as criminal charges are more serious than the civil lawsuits the company has faced so far
Lawmakers and gaming regulators have been actively trying to redefine the legal framework in which Kalshi and fellow prediction markets operate, hinging on the opinion that these companies offer a roundabout way to gamble, without meeting the rigorous standards set out by local jurisdictions. Now, Arizona has taken things further, as the state’s Attorney General, Kris Mayes, has filed 20 misdemeanor charges against the company, including running what the AG has described as illegal gambling business and offering bets on the elections. This comes just days after Kalshi made a pre-emptive move against the state, filing a lawsuit against Arizona in response to a cease-and-desist letter issued last year. As prediction market and legal specialist David Wallach highlighted on X (previously Twitter), this is the first time that criminal charges have been filed against Kalshi in any court in the United States. These are the first criminal charges filed against Kalshi in any court in the United States (h/t @BobbyAllyn). Raises the stakes considerably on both Kalshi’s motion for preliminary injunction filed in AZ federal court yesterday and on the upcoming CA9 oral argument. https://t.co/LW7Qgr2hgA The charges were filed on Monday, March 16, in the superior court of the state of Arizona and the county of Maricopa, and significantly raise the stakes for Kalshi, as the company would need to make sure that it argues a strong case to avoid further legal troubles. In a statement, Mayes outlined the motivation behind the lawsuit: 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. This new legal assault comes against a much broader context in which the company is also litigating in other states, including Massachusetts, Nevada, and New Jersey, among others. AG Mayes argues in his case that Kalshi was not authorized to offer several wagers (Kalshi specifically describes prediction options as trades or markets and avoids the terminology bet), among which were sports selections on individual athlete performances as well as political markets. His office has gone so far as to single out specific instances of this offense, citing the 2026 Arizona gubernatorial contest, the 2026 Arizona Republican gubernatorial primary, and the 2026 Arizona secretary of state race. Other markets targeted by the AG in the complaint include the 2028 US presidential race, as well as bets on the SAVE Act. Arizona will not be bullied into letting any company place itself above state law, said Attorney General Mayes.
