Arizona Files the First Criminal Charges Against Kalshi

Arizona prosecutors filed criminal charges against the prediction market Kalshi this week, NPR, NBC News, CNBC and CBS News reported, accusing it of running an unlicensed gambling operation. NPR described it as the first criminal case by any state against the company. Attorney General Kris Mayes brought the case in Maricopa County, according to NBC News, CBS News and the law firm Morgan Lewis.

NPR reported that the state alleges Kalshi offers unlicensed online betting on sports and elections to Arizona residents without approval from state regulators; sports betting in Arizona is overseen by a state gaming commission and election gambling is illegal there. NBC News, CNBC and CBS News described the filing as 20 misdemeanor counts, and CBS News and Morgan Lewis put the split at four counts for election wagering and 16 for sports wagering. Morgan Lewis, alone among the outlets, said the counts rest on small transactions often between $1 and $5. NPR reported that Kalshi’s executives are not named as defendants in the charging documents and that misdemeanor convictions could include asset forfeiture and possible jail time; CBS News and NBC News also described possible fines, jail time or probation.

Kalshi, based in New York, rejected the charges. A spokesperson called them “seriously flawed” and “meritless” and said the company will fight, NPR reported; NBC News, CNBC and CBS News quoted the company calling the case built on “paper thin” arguments and said it is subject to federal jurisdiction. Mayes said, “No company gets to decide for itself which laws to follow,” according to NBC News, CNBC and Morgan Lewis. NBC News and CBS News reported that Kalshi had filed its own suit against Arizona officials in federal court days earlier, which Mayes’s office called an attempt to avoid accountability.

The Commodity Futures Trading Commission, which NPR said oversees Kalshi, weighed in. Chairman Michael Selig wrote in a post on X that the case is “a jurisdictional dispute and entirely inappropriate as a criminal prosecution,” and that the agency is “watching this closely and evaluating its options,” NPR reported; CBS News also quoted him calling it a jurisdictional dispute and said the CFTC is watching the case. NPR noted that Selig is the only sitting commissioner on the five-seat panel and that the Trump administration has backed prediction markets. Morgan Lewis said the CFTC told the Ninth Circuit in a February 17 brief that federal law gives it exclusive jurisdiction over event contracts.

The case lands in a crowded field. NPR counted more than 20 civil lawsuits over Kalshi’s legal status, and Morgan Lewis put the fights at roughly 20 federal and state actions in at least 14 states. Gambling lawyer Daniel Wallach told NPR the Arizona case “raises the stakes considerably” for pending Kalshi cases there, and that Kalshi has sued to block enforcement in New Jersey and Tennessee. CNBC likewise reported that Kalshi has won preliminary injunctions in New Jersey and Tennessee. Morgan Lewis said Ninth Circuit arguments on the preemption question are scheduled for April and noted that Arizona’s gaming regulator sent Kalshi a cease-and-desist letter in May 2025.