Arizona charges Kalshi over ‘illegal gambling’
The state accused the company of taking illegal bets on world events
What happened
Arizona Attorney General Kris Mayes (D) on Tuesday filed criminal charges against Kalshi, accusing the online prediction marketplace of “running an illegal gambling operation and taking bets on Arizona elections, both of which violate Arizona law.” The 20-count indictment alleges that Kalshi illegally accepted bets on sporting outcomes, political events and election results, among other “unlicensed wagering.”
Who said what
“Arizona will not be bullied into letting any company place itself above state law,” Mayes said in a statement. The criminal charges, the first filed by a state against Kalshi, mark a “new front in a high-stakes legal battle over whether prediction markets should be subject to the same rules as gambling companies,” The Associated Press said. President Donald Trump, whose son Don Jr. is a “strategic adviser” for Kalshi, has thrown his “support behind the multibillion-dollar prediction market industry.” Several other states have sued Kalshi and its rival, Polymarket.
The Arizona lawsuit “comes less than a week” after Kalshi filed a preemptive suit, asking a federal judge to rule that its wagers are “not gambling but instead something more akin to trading futures on commodities,” the Arizona Capitol Times said. The company argues its “contracts” can only be regulated by the federal Commodity Futures Trading Commission, “out of reach of state authorities.” CFTC chair Michael Selig appeared to agree, calling the Arizona suit a “jurisdictional dispute” that is “entirely inappropriate as a criminal prosecution.”
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What next?
The outcome of the legal actions in Arizona and “at least nine other states” could have “sweeping implications for how sports betting — which makes up roughly 90% of Kalshi’s trading volume — is regulated in the U.S.,” the AP said. Legal experts predict the dispute over prediction markets “has a good chance of making its way to the Supreme Court,” Axios said.
