Arizona Slaps Kalshi With First-Ever Criminal Charges Over Election Bets

Arizona Attorney General Kris Mayes filed a 20-count criminal information in Maricopa County Superior Court, charging Kalshi with operating an unlicensed gambling business and taking bets on state and federal elections. The indictment lists four specific contests: the 2028 U.S. presidential race, the 2026 Arizona governor’s race, the 2026 Republican primary for governor, and the 2026 race for Arizona secretary of state. Gambling on elections is illegal under Arizona law, and the state’s gaming commission regulates all sports wagering.

Kalshi, headquartered in New York City, called the case “paper-thin” and vowed to fight. “States like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do it,” the company said in a statement released Tuesday. The platform argues that its products are federally regulated “event contracts,” not casino-style bets, and therefore fall under the exclusive jurisdiction of the Commodity Futures Trading Commission.

CFTC Chair Michael Selig posted on X that the prosecution is “entirely inappropriate” and promised the agency is “watching this closely and evaluating its options.” Selig currently sits alone on the five-seat commission; the other four positions remain unfilled more than a year into President Trump’s second term. The administration has openly embraced prediction markets, pledging to defend them against state-level gambling enforcement.

Sports markets now drive roughly 90 percent of Kalshi’s trading volume and fee revenue, according to a Financial Times analysis. Super Bowl wagering on the platform topped $1 billion last month, producing annualized revenues of about $1.3 billion for the company. Arizona prosecutors say Kalshi never applied for the state-issued licenses that legal sportsbooks must obtain and that it has been collecting bets from residents without paying state taxes or oversight fees.

Arizona becomes the first state to bring criminal charges against Kalshi, but it is not alone in court. More than 20 civil lawsuits and regulatory actions are pending nationwide, and Massachusetts barred Kalshi from offering sports markets in February on public-health grounds. Daniel Wallach, a gaming-law attorney, predicted “a domino effect,” noting that misdemeanor convictions in Arizona could expose the company to asset forfeiture and possible jail time for responsible employees.

Last week Kalshi sued Arizona’s gaming regulator, seeking an injunction to block future enforcement. Attorney General Mayes fired back that the company is “suing states rather than following their laws.” Courts have split on whether the federal CFTC approval pre-empts state gambling statutes; the question is expected to reach the U.S. Supreme Court.

Kalshi must answer the criminal information within weeks or risk default. The company will almost certainly ask a federal judge to halt the state case while it litigates pre-emption, repeating a “race-to-the-courthouse” strategy that has worked in New Jersey and Tennessee. Meanwhile, Arizona residents who have open positions on the four named elections face uncertainty: the markets remain live on Kalshi’s site, but state investigators could subpoena trading records as evidence.