Arizona prosecutors filed criminal charges against the prediction market Kalshi on Monday, accusing the platform of running an illegal gambling outfit in the Grand Canyon State.
The 20-count complaint was filed in Maricopa County charging that Kalshi allegedly operates a gambling business in Arizona without a license and takes illegal bets 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,” state AG Kristin Mayes said in a statement.
“No company gets to decide for itself which laws to follow.”
The 20 misdemeanor charges are punishable by fines between $10,000 and $20,000.
The Arizona action is not in civil court so there is, for now, no enforcement action being sought to shut down Kalshi within Arizona state lines.
“Sadly, a state can file criminal charges on paper thin arguments," according to a Kalshi company statement.
This is the latest state action taken against Kalshi, which insists it's not a gambling operation — but merely a conduit for federally regulated swaps, a type of contract often found in financial investing.
"States like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do it," according to Kalshi's statement.
"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.”
Sports gambling is legal in 39 states and the District of Columbia. Wagers can be placed digitally in 32 of those jurisdictions.
Sports betting companies, such as FanDuel and DraftKings, have had to negotiate their way into those states, meeting regulatory standards and paying taxes to operate there.
Legal sports bets can be made online in Arizona and at brick-and-mortar locations.
There's a Caesars Sportsbook, branded as "the Official Sports Betting Partner of the Arizona Diamondbacks," just feet outside the gates of Chase Field in Phoenix.
