Arizona filed criminal charges against the parent companies of Kalshi, a startup prediction platform, on Tuesday accusing them of operating an illegal gambling business without a license.
Arizona Attorney General Kris Mayes said Kalshi accepted bets from residents on sports, elections and events in violation of state law. Arizona doesn’t allow unlicensed wagering businesses and bans elections betting, Mayes said. The state charged the companies with 20 counts of illegal betting and wagering.
“No company gets to decide for itself which laws to follow,” Mayes said.
New York-based Kalshi said, “These state-court charges are seriously flawed. It’s gamesmanship.”
Michael Selig, chair of the Commodity Futures Trading Commission, said the federal agency was watching the Arizona case closely. “This is a jurisdictional dispute and entirely inappropriate as a criminal prosecution,” he said.
Marketplaces like Kalshi and its rival Polymarket have expanded dramatically in recent years with a surge of user interest. Earlier this month, The Wall Street Journal reported that the two companies were in early conversations with investors about fundraising to reach a roughly $20 billion valuation.
Both Kalshi and Polymarket have been under scrutiny for allowing bets on the U.S. striking Iran and the ouster of the country’s supreme leader, Ayatollah Ali Khamenei.
States including Massachusetts and Michigan have sued Kalshi for illegal sports betting and pushed to regulate the prediction markets industry. They argue the fast-growing field, where users can buy and sell event contracts, amounts to illegal betting.
Arizona’s gaming department had sent Kalshi a cease-and-desist letter in May 2025.
Kalshi in recent months has sued a handful of states including Arizona, Iowa and Utah to stop what it believed were impending bans. The company said it thought its event contracts were under federal jurisdiction—not state.
Federal courts recently rejected Kalshi’s attempts to prevent bans on its businesses in Ohio and Nevada. Kalshi has appealed the decisions.
