The state of Arizona has filed criminal charges against prediction-market company Kalshi, accusing the company of running an illegal gambling business and unlawfully allowing state residents to place bets on elections.
Arizona Attorney General Kris Mayes filed the charges against New York-based Kalshi on Tuesday, laying out 20 separate counts across 15 court pages. Sixteen counts pertain to betting and wagering, with the state accusing the company of accepting between $1 and $30 bets on various sports games, attendance odds, and whether a certain bill would become a law between December 2025 and February 2026.
Four counts are related to election wagering, with Kalshi allegedly accepting bets on matters like if Vice President JD Vance will win the 2028 Presidential Election; and if a Democratic candidate will win the 2026 election for Secretary of State of Arizona.
Under Arizona law, operating an unlicensed wagering business is prohibited and election betting is banned. The counts are all misdemeanor offenses, punishable by fines between $10,000 and $20,000, meaning a maximum fine penalty of $400,000 against the company that has recently been valued at $11 billion.
“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,” Attorney General Mayes said in a press release. “No company gets to decide for itself which laws to follow.”
In a statement provided to Rolling Stone, a spokesperson for Kalshi called the charges “meritless” and said the company plans to fight the case in court. “These state-court charges are seriously flawed. It’s gamesmanship,” the company representative said. “Four days after Kalshi filed suit in federal court, these charges were filed to circumvent federal court and short-circuit the normal judicial process. They attempt to prevent federal courts from evaluating the case based on the merits — whether Kalshi is subject to exclusive federal jurisdiction.”
Earlier this month, Kalshi preemptively sued Arizona — following the state issuing the company a cease-and-desist notice — to stop the state from filing charges such as the ones that were brought on Tuesday. According to Reuters, this is the first instance of a state filing criminal charges against Kalshi.
“Kalshi is making a habit of suing states rather than following their laws. In the last three weeks alone, the company has filed lawsuits against Iowa and Utah, and now Arizona,” Mayes added in press release. “Rather than work within the legal frameworks that states like Arizona have established, Kalshi is running to federal court to try to avoid accountability.”
Founded in 2018, Kalshi is among the leading prediction market companies that have popped up in recent years, like its main rival, Polymarket. Kalshi allows users to place bets on the outcomes of any event imaginable, from predicting the Rotten Tomatoes score of Ryan Gosling’s new movie, Project Hail Mary, to the timing of a possible U.S.-Iran nuclear deal.
The trading is done under the newly-coined term “events contracts,” which companies have argued falls under the exclusive purview of the Commodity Futures Trading Commission. The companies are hoping the distinction will shield them from litigation that accuses the businesses of running unlicensed gaming operations.
