Arizona became the first state to criminally charge a prediction market platform today when Attorney General Kris Mayes filed misdemeanor criminal charges against market-leader Kalshi on March 17, 2026. Declaring that “no company gets to decide for itself which laws to follow,” Mayes labeled Kalshi an illegal gambling operation that continues to violate Arizona laws.

The criminal complaint filed by AG Mayes lists 20 counts related to Kalshi accepting bets on professional and college sports, elections, and even on whether Elon Musk would attend the Super Bowl. The inclusion of a football prop bet in Count 5 of the complaint underscores the broader national debate regarding whether gambling and prediction markets threaten sporting integrity, particularly in light of recent NCAA point-shaving scandals.

The complaint accuses Kalshi of operating an unlicensed wagering business in violation of Arizona law. In addition, four of the counts claim that the company has violated a separate law that explicitly bans any betting on elections.

In recent months, Kalshi and Polymarket, the two largest US prediction market platforms, have aggressively filed preemptive lawsuits in federal court to prevent state regulators from interfering with prediction markets, particularly where they believed bans were imminent. As part of this effort, Kalshi filed a motion for a temporary restraining order with U.S. District Court for the District of Arizona on March 12 to head off potential state enforcement action. In this instance, the preemptive strategy may have backfired—U.S. District Court Judge Michael Liburdi denied the motion on March 16, and AG Mayes announced the criminal complaint the following day.

The criminal charges appear to present a new legal challenge for Kalshi. When Judge Liburdi published his order the following day denying Kalshi’s motion for a temporary restraining order, he stated an intent to consider the criminal charges for the preliminary injunction hearing on April 3. He instructed Kalshi to show cause why the federal court “should not abstain from this case in light of the criminal proceedings brought by the State of Arizona.” 

Kalshi argues that states lack standing to interfere with its business model as it is not a gambling platform that falls under the governance of individual state laws. Kalshi is a Designated Contract Market, where users buy and sell event contracts, regulated by the Commodity Futures Trading Commission (CFTC). Kalshi’s response to the Arizona criminal charges argues that event contracts fall exclusively under federal jurisdiction: “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.”

Several states have issued cease-and-desist letters to Kalshi and other prediction market platforms, and Kalshi is currently contesting civil lawsuits in Massachusetts, Nevada, and Michigan that seek to stop the company from offering sports event contracts. In addition to complaints that Kalshi is skirting state gambling laws, there are concerns that perceptions of insider trading in the prediction markets are driving unwanted legislative interest at both state and federal levels.

CFTC Chairman Michael Selig has denounced Arizona’s criminal charges against Kalshi as “entirely inappropriate,” noting that the legal fight is a jurisdictional issue. The CFTC has maintained it has sole jurisdiction over prediction markets, which it recently spelled out in an amicus brief in the U.S. Court of Appeals for the Ninth Circuit.

Hours before Arizona filed the criminal complaint against Kalshi, the CFTC issued a notice of proposed rulemaking for prediction markets and is seeking public comment.

In the meantime, Kalshi’s initial appearance in the Arizona criminal case is scheduled for April 13.