Arizona files first state criminal charges against Kalshi, accusing it of illegal gambling

• Arizona filed criminal charges against Kalshi, saying it has violated two state laws.
• It's the first state to file criminal charges in the prediction market's legal battle with states.
• The Trump administration has signaled it will defend prediction markets in these fights.

Kalshi's legal battle with states is heating up.

Arizona Attorney General Kris Mayes on Tuesday filed criminal charges against the online gambling company — a first for the company in its expanding battle with states. Kalshi lets people bet on real-world events, from who will win a pro sports game to the weather.

Mayes's 20-count filing against the prediction market platform includes 16 charges of operating an unlicensed gambling business and four charges of election wagering. All of the charges are misdemeanors and could carry potential fines.

"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," Mayes said in a statement on Tuesday. "No company gets to decide for itself which laws to follow."

Kalshi spokeswoman Elisabeth Diana told Business Insider that Arizona's charges were "seriously flawed" and an example of "gamesmanship."

"These charges are meritless, and we look forward to fighting them in court," Diana said.

Kalshi and other prediction markets, such as Polymarket, have been sued by several states in an ongoing legal battle over whether the companies should be subject to state-level gambling laws, a battle that's likely to eventually end up before the Supreme Court.

Arizona and other states have a variety of laws to regulate gambling. Prediction market platforms have argued that what they offer — trading on event contracts — does not qualify as gambling.

Commodity Futures Trading Commission Chair Michael Selig, the Trump administration's prediction market regulator, has said that the commission will seek to defend federal jurisdiction over the platforms.

Mayes' charges came several days after Kalshi sued the state preemptively.

Diana said that the state filed the charges against Kalshi to "circumvent federal court and short-circuit the normal judicial process," including allowing federal courts to evaluate "whether Kalshi is subject to exclusive federal jurisdiction."