Arizona Becomes First State to Criminally Charge Kalshi

The state of Arizona has filed criminal charges against the online prediction market Kalshi for allowing people to bet on elections and “operating an illegal gambling business” in the state.

Arizona Attorney General Kris Mayes filed 20 misdemeanor counts in Maricopa County Superior Court in the state Tuesday, saying in a statement that “no company gets to decide for itself which laws to follow.”

“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.

The New York–based Kalshi said in its own statement that Mayes’s case is based “on paper-thin arguments,” arguing that its business model is not like a casino or a sportsbook and that it “should not be overseen by a patchwork of inconsistent state laws.” Instead, the company says it serves as a conduit for federally regulated swaps, putting it under the federal jurisdiction of the Commodity Futures Trading Commission.

“States like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do it,” Kalshi’s statement said. The company faces fines of between $10,000 and $20,000 for each violation if found guilty.

Kalshi’s foray into political betting has raised questions about whether politicians and other insiders are betting on certain events and elections to cash in. They allow people to profit off predicting war and the destruction that comes with it, as was the case with the Iran war or the decision to strike Venezuela. Kalshi recently announced partnerships with CNN and the Associated Press, while its competitor Polymarket has partnered with The Wall Street Journal, Substack, and X.

Arizona’s criminal case will be watched across the country to see if prediction markets can be reined in or regulated. At the very least, hopefully the fate of America’s leadership and human suffering around the world won’t be the focus of wagers from the depraved.