Arizona has filed criminal charges against Kalshi, accusing the New York-based prediction markets platform of running an unlicensed gambling business and accepting bets on elections.

Attorney General Kris Mayes said the company “may brand itself as a prediction market, but it is taking illegal bets on Arizona elections,” which violates state law.

The 20-count filing in Maricopa County Superior Court claims Kalshi allowed Arizona residents to wager on professional and college sports, individual player performances, and political outcomes.

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Gambling or Trading Products

Prosecutors cited bets on the 2028 U.S. presidential race and upcoming 2026 state elections, including the governor and secretary of state contests.

Kalshi said in a statement that Arizona’s accusations rest on “paper-thin arguments,” arguing that its platform operates as a financial exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term regulated by the U.S. Commodity Futures Trading Commission. The company added that different states should not oversee a “nationwide financial exchange.”

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Arizona’s action comes amid a broader regional and national fight over how to regulate Kalshi’s event contracts, with the company now entangled in dozens of cases that pit its claim of exclusive federal oversight by the U.S. Commodity Futures Trading Commission against the authority of states to enforce their gambling laws.

In recent weeks, Kalshi has preemptively sued regulators in states including Arizona, Iowa and Utah after pushback on its sports and political markets, while several states and tribal authorities have launched their own actions to block in-state access to the platform.

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Attorney General Mayes said Kalshi has a pattern of suing states rather than complying with their wagering laws. The company recently filed cases against Iowa, Utah, and Arizona to block state enforcement.

Courts have issued mixed rulings so far: a judge in Tennessee allowed Kalshi to keep operating under a temporary stay, while decisions in states such as Maryland, Massachusetts and Ohio have backed state powers to treat the firm’s contracts as gambling products subject to local licensing rules.

States Push Back on CFTC

A federal judge in Ohio recently rejected Kalshi’s bid for an injunction, ruling that the state’s authority to regulate gambling outweighed the firm’s operational claims. The Arizona case marks the first criminal prosecution against Kalshi by a state.

The latest development comes as a defiance to a growing campaign by federal regulators to claim sole authority over prediction markets, deepening a clear split between Washington and the states. CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term Chair Michael Selig has recently pushed a moreassertive line, directing the agency to intervene in court battles.

He insists that federal derivatives rules, not state gambling codes, should govern event contracts. He has cast the wave of state enforcement against platforms such as Kalshi, Coinbase, Crypto.com and Polymarket as part of a broader state-led offensive.