Arizona has filed criminal charges against Kalshi, accusing him of operating an illegal gambling business. “Kalshi may call itself a ‘prediction market,’ but what it is actually doing is running an illegal gambling operation and placing bets on Arizona elections, which violate Arizona law,” Arizona Attorney General Kris Mayes said in a statement. The case could ultimately go to the Supreme Court to decide whether federal oversight by the Commodity Futures Trading Commission overrides state gambling laws. Bloomberg reports: While state regulators have taken steps to crack down on what they say is unlicensed gambling at the Kalshi site, Arizona appears to be the first state to escalate to criminal charges. The charges cited in the complaint are misdemeanors, which carry less serious penalties than felonies. […] Prediction market exchanges like Kalshi have said they should continue to be regulated by the U.S. Commodity Futures Trading Commission despite opposition from some state officials, who argue the trading should be subject to state gambling laws.
The Arizona criminal complaint follows Kalshi’s decision last week to block the state’s gaming department from taking enforcement action against the company. “These are the first criminal charges of any kind filed against Kalshi in any court in the United States, but they will likely be the first of several,” said Daniel Wallach, a sports and gaming attorney.
