Arizona prosecutors filed criminal charges against the prediction market Kalshi on Monday, accusing it of running an illegal gambling outfit in the state.
The 20-count complaint, filed in Maricopa County, alleges that Kalshi operates a gambling business in Arizona without a license and takes illegal bets on elections.
“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,” state Attorney General Kristin Mayes said in a statement.
“No company gets to decide for itself which laws to follow,” she said.
The 20 misdemeanor charges are punishable by fines of $10,000 to $20,000.
The Arizona action is not in civil court, so for now, no enforcement action is being sought to shut Kalshi down within Arizona state lines.
“Sadly, a state can file criminal charges on paper thin arguments,” Kalshi said in a statement.
It is the latest state action taken against Kalshi, which insists it’s not a gambling operation but merely a conduit for federally regulated swaps, a type of contract often found in financial investing.
“States like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do it,” according to Kalshi’s statement.
“As other courts have recognized and the CFTC affirms, Kalshi is subject to federal jurisdiction. It’s different from what sportsbooks and casinos offer their customers, and it should not be overseen by a patchwork of inconsistent state laws,” it said, referring to the Commodity Futures Trading Commission.
Sports gambling is legal in 39 states and the District of Columbia. Wagers can be placed digitally in 32 of those jurisdictions.
Sports betting companies, such as FanDuel and DraftKings, have had to negotiate their way into those states, meeting regulatory standards and paying taxes to operate there.
Arizona’s prosecution comes shortly after Kalshi filed pre-emptive civil actions against Utah, Iowa and Arizona in hope of stopping them states from acting against it.
“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 said in a statement.
“Rather than work within the legal frameworks that states like Arizona have established, Kalshi is running to federal court to try to avoid accountability,” she said.
Legal sports bets can be made online in Arizona and at brick-and-mortar locations.
There’s a Caesars Sportsbook, branded as “the Official Sports Betting Partner of the Arizona Diamondbacks,” just feet outside the gates of Chase Field in Phoenix.
The Arizona prosecution includes allegations that Kalshi is taking illegal bets on at least four political races: this year’s governor’s race, the GOP gubernatorial primary, the secretary of state’s contest and the 2028 presidential election.
