Days after Kalshi sued Arizona’s Attorney General Kristin Mayes and leaders at the Arizona Department of Gaming (ADG) in federal court, Mayes filed a criminal lawsuit against the prediction market platform in state court.
In a filing submitted on Monday, March 16, in the Superior Court of the State of Arizona, Mayes accuses Kalshi of offering “an illegal gambling business” in the state.
The AG is pursuing 20 criminal misdemeanor charges and stated in the filing that Kalshi offers a range of “bets” on markets including professional and college sports and state and federal elections. The AG’s office release noted that Arizona law prohibits operating an unlicensed wagering business, and separately bans any betting on elections.
“Kalshi may brand itself as a ‘prediction market,’ but what it’s actually doing is running an illegal gambling operation and taking bets on Arizona elections, both of which violate Arizona law,” said Mayes in a press release issued by her office. “No company gets to decide for itself which laws to follow.”
Arizona and Kalshi take fight to court(s)
The chess match between Kalshi and Arizona has escalated into litigation in the last week.
In May 2025, ADG Director Jackie Johnson made the first move, sending a cease-and-desist to the company (as well as to Crypto.com) after both platforms began offering sports event contracts in the state. In those notices, the gaming regulator accused the companies of offering what it said equated to unlicensed betting in contravention of state law.
Johnson also publicly warned gaming licensees last September that offering event contracts without a license could put their state wagering licenses in jeopardy, and noted that even prediction market activity outside Arizona would be taken into account.
Last week, Kalshi filed a federal court complaint seeking a permanent injunction and temporary relief against Arizona officials, in which it stated that the C&D was a clear sign that there is a “substantial risk” that the ADG would try to take legal action against Kalshi if it did not shut up shop in the Grand Canyon State.
Kalshi subsequently formally applied for a preliminary injunction in that federal court case, but its motion for a temporary restraining order in the meantime was denied on Tuesday. A hearing for the preliminary junction request is scheduled for April 3.
Kalshi filed similar pre-emptive measures against Utah in late February and Iowa last week.
Kalshi’s lawsuit claimed that Mayes “previously assured Kalshi that it would not pursue an enforcement action without providing prior notice” and claimed that any attempted enforcement action would violate the Commodity Exchange Act and the Commodity Futures Trading Commission’s federal oversight of event contracts.
CFTC Chairman Mike Selig had his say, calling Arizona’s attempt at a criminal prosecution “entirely inappropriate.”
Arizona’s arguments are ‘paper-thin’, says Kalshi
Mayes said in a release on Tuesday that “Arizona will not be bullied into letting any company place itself above state law.”
“Kalshi is making a habit of suing states rather than following their laws,” she added. “In the last three weeks alone, the company has filed lawsuits against Iowa and Utah, and now Arizona. Rather than work within the legal frameworks that states like Arizona have established, Kalshi is running to federal court to try to avoid accountability.”
Kalshio’s court cases so far, whether instances in which Kalshi sued first or situations in which state authorities made the first litigious move, have centered on civil complaints rather than criminal charges.
“Sadly, a state can file criminal charges on paper-thin arguments,” Kalshi Head of Communications Elisabeth Diana told SBC Americas on Tuesday. “States like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do it.
“As other courts have recognized and the CFTC affirms, Kalshi is subject to federal jurisdiction. It’s different from what sportsbooks and casinos offer their customers, and it should not be overseen by a patchwork of inconsistent state laws.”
