US, Mar 19: Authorities in the US state of Arizona have filed criminal charges against prediction market platform Kalshi, accusing it of operating an illegal gambling business and facilitating unlawful betting on elections.
Arizona Attorney General Kris Mayes announced the move, stating that the company’s activities violate state gambling laws. The case marks the first instance of a US state pursuing criminal charges against the New York-based firm.
In a statement, Mayes alleged that Kalshi’s operations go beyond prediction markets and effectively function as an unlicensed gambling platform.
She said the company had allowed residents to place bets on a range of events, including elections in Arizona.
According to court filings in Maricopa County, prosecutors have brought multiple misdemeanor charges, alleging that Kalshi accepted wagers on professional and college sports as well as political contests, including upcoming state and national elections.
Kalshi, however, rejected the allegations, saying its business model differs from traditional sportsbooks and casinos. The company argued that its event-based contracts fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC), rather than state-level gaming regulators.
The firm also criticised what it described as inconsistent regulatory approaches across states, maintaining that a nationwide financial exchange should not be governed by a patchwork of local laws.
The legal action comes amid a broader regulatory dispute in the United States over whether prediction market platforms should be treated as financial exchanges or gambling operators.
Federal regulators, including the CFTC, have shown support for such platforms in ongoing legal debates with state authorities.Officials in Arizona, however, contend that offering contracts tied to election outcomes and sports events amounts to illegal betting under state law.
The case is expected to have wider implications for the regulation of prediction markets in the US, particularly as states and federal agencies continue to clash over jurisdiction and oversight of the emerging sector.
