Prediction Market Kalshi Fights Arizona Criminal Charges

Prediction market Kalshi said Tuesday (March 17) that a lawsuit filed by the Arizona attorney general is meritless and that the company looks forward to fighting them in court.

The company’s comments came after Arizona Attorney General Kris Mayes announced in a Tuesday press release that she filed criminal charges against the companies behind the prediction market platform, KalshiEx LLC and Kalshi Trading LLC.

In its filing, the state alleges that the companies violated Arizona laws that prohibit operating an unlicensed wagering business and that ban betting on elections, according to the release.

“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 the release. “No company gets to decide for itself which laws to follow.”

Mayes added that Kalshi sued the state Thursday (March 12), after suing Idaho and Utah. She said the company did so to avoid accountability under state law.

“Rather than work within the legal frameworks that states like Arizona have established, Kalshi is running to federal court to try to avoid accountability,” Mayes said.

Reached by PYMNTS, Kalshi said in an emailed statement: “These state-court charges are seriously flawed. It’s gamesmanship.

“Four days after Kalshi filed suit in federal court, these charges were filed to circumvent federal court and short-circuit the normal judicial process,” the company said. “They attempt to prevent federal courts from evaluating the case based on the merits — whether Kalshi is subject to exclusive federal jurisdiction.

“These charges are meritless, and we look forward to fighting them in court,” Kalshi said.

It was reported in February that the U.S. Commodity Futures Trading Commission (CFTC) is making the case that the authority to oversee prediction markets lies with it. The regulator filed an amicus brief in federal court defending its right to enforce prediction markets rather than individual states.

Later in February, the CFTC said that it has full authority to police illegal trading practices on designated contract markets such as Kalshi.

PYMNTS reported in October that unlike traditional sports betting markets, prediction markets are regulated federally by the CFTC, and that leaves a lot of opportunity for potentially capturing users across states that have individually stringent iGaming, sports betting and gambling laws.