Arizona Isn't Letting Itself Be 'Bullied' by Kalshi

Arizona just turned up the heat on the booming prediction-market business. The state's attorney general has filed the first-ever criminal case against Kalshi, accusing the New York-based platform of operating an unlicensed online gambling scheme that lets Arizonans wager on sports and elections without state approval, reports NPR. Sports betting in Arizona is limited to licensed operators, and betting on elections is prohibited. While more than 20 civil cases already target Kalshi's legal status, Arizona is the first to claim the company has actually broken criminal law—a move that could bring asset forfeiture and even jail time if convictions follow, though no executives are named in the complaint.

AG Kris Mayes accused Kalshi of ducking state rules by going "to federal court to try to avoid accountability." Kalshi called the charges "seriously flawed" and "meritless" and promised to fight them, railing against the state's "paper-thin arguments," per Reuters. The case lands in the middle of an escalating clash between states and the Trump administration, which has welcomed prediction platforms like Kalshi and rival Polymarket and vowed to defend them, per NPR. Kalshi operates under the purview of the Commodity Futures Trading Commission, which is traditionally focused on contracts tied to commodities like oil and livestock. Under Trump's second term, CFTC Chair Michael Selig has allowed prediction markets to expand and blasted Arizona's move as "entirely inappropriate as a criminal prosecution," saying the agency is "watching this closely and evaluating its options."

The legal offensive comes as prediction markets face mounting controversy over what people are allowed to bet on. Polymarket's offshore operation has hosted wagers on events such as the capture of Nicolas Maduro and the killing of Iran's supreme leader, despite US bans on bets involving war and assassinations. An Israeli journalist recently reported a wave of death threats from Polymarket traders trying to pressure him to tweak a story about an Iranian bombing so their bets would pay out; he refused, and Polymarket said it would ban those involved. In Washington, lawmakers have responded to such markets with proposals to tighten federal restrictions. Meanwhile, "Arizona will not be bullied into letting any company place itself above state law," Mayes said in a statement, per the AP.