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PHOENIX (CN) — Arizona filed criminal charges Tuesday against Kalshi, accusing the popular prediction market of hosting bets on state and federal 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,” said Arizona Attorney General Kris Mayes. “No company gets to decide for itself which laws to follow.”
Kalshi is facing four counts of election wagering, a Class 2 misdemeanor, for taking bets on the 2028 presidential race, the 2026 Arizona gubernatorial race, the 2026 Arizona Republican gubernatorial primary and the 2026 Arizona secretary of state race. It faces 16 additional Class 1 misdemeanors for wagering on events like Arizona college sports, professional sports and whether the SAVE America Act — a collection of bills intended to crack down on voter fraud — will become federal law.
One contract asked whether Phoenix Suns basketball player Devin Booker would score more than 20 points against the San Antonio Spurs on Feb. 19. Another asked whether Elon Musk would attend the Super Bowl.
Kalshi, founded in 2018, is advertised as a prediction market to trade real-world events similarly to how stocks are traded. “Kalshi’s vision is to allow people to capitalize on their opinions, trade in the domain of every day and hedge risks that relate to them,” according to its website.
Though the Commodity Futures Trading Commission initially denied Kalshi permission to trade on political outcomes, a federal judge in Washington struck down the commission’s decision in 2024, clearing the way for legal betting on congressional outcomes for the first time. The commission appealed the decision, but the D.C. Circuit affirmed the decision.
Kalshi is not registered with the Arizona Corporation Commission. State law prohibits unlicensed betting organizations and outright bans election betting. The 20-count indictment, filed Tuesday morning, covers bets from Dec. 12, 2025, to as recently as Thursday — the same day Kalshi filed a preemptive federal case against the state.
In the complaint, filed last week in Arizona federal court, Kalshi predicts “the state of Arizona will imminently bring an enforcement action against Kalshi with the intent to prevent Kalshi from offering event contracts for trading on its federally regulated exchange,” following a cease-and-desist letter from the Arizona Department of Gaming.
Kalshi claims federal law preempts Mayes from subjecting the company to state law under the 1936 Commodities Exchange Act. In 1974, Congress established the Commodity Futures Trading Commission to oversee the Commodities Exchange Act.
“The text, purposes, and statutory history of the CEA leave no question that Congress sought to preempt state regulation of derivatives on exchanges overseen by the CFTC, known as “designated contract markets,” Kalshi says in the complaint.
Federal courts in Tennessee and New Jersey have already granted Kalshi preliminary injunctions against similar state actions. In other states, like Ohio and Nevada, federal courts have ruled against Kalshi. The prediction market is facing at least 20 federal lawsuits.
Kalshi accuses Arizona of violating the supremacy clause of the U.S. Constitution. It asks that the judge strike down Arizona’s betting laws as unconstitutional and prohibit Arizona from enforcing those laws against Kalshi.
Mayes was undeterred by the proactive complaint.
“Arizona will not be bullied into letting any company place itself above state law,” Mayes said in a Tuesday press release.
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