Arizona has filed a criminal case against prediction market platform KalshiEx LLC and its affiliate Kalshi Trading LLC, accusing the companies of operating illegal betting activity in the state, including wagers on sports events and election outcomes.
The charges, filed in Maricopa County Superior Court, include 20 counts tied to alleged activity between December 2025 and March 2026. State prosecutors allege the companies accepted bets without authorization across a range of events, including professional and college sports and proposition-style offerings tied to player performance.
Prosecutors cite wagers placed on NFL games, college basketball matchups, and NBA contests. In one instance, the companies are accused of accepting a $30 bet on a professional football game in December 2025. Other counts reference smaller bets, often between $1 and $20, tied to game results, player statistics, and multi-leg combinations.
The complaint describes wagers tied to future events, including whether a public figure would attend a specific event and whether a legislative measure would become law. Court filings also indicate the companies were not licensed to offer wagering services in Arizona and were not registered to conduct business in the state as foreign entities.
Under Arizona law, operating a betting business without state approval is a criminal offense. It applies to companies that take or manage bets on games or other uncertain events and focuses on the operation of a betting business rather than the size of individual wagers. Even low-dollar bets may qualify if they are part of a broader system accepting money on event outcomes, regardless of how the wagers are structured or labeled.
Operating without approval places the activity outside Arizona’s regulated gaming system. Prosecutors allege the conduct falls within these restrictions because the companies accepted money tied to event outcomes without authorization.
Several counts involve election-related betting, which Arizona regulates separately from other forms of wagering. Court records indicate the companies accepted bets on the outcome of the 2028 presidential election, control of Congress, and statewide races in Arizona, including contests for governor and secretary of state. One count references a wager on whether a specific candidate would win the presidential election, reflecting the broader range of political outcomes included in the offering.
State law prohibits betting on political outcomes altogether, regardless of whether an operator is licensed. Unlike sports betting, which may be permitted under a regulated system, election wagering is not allowed. The restriction is intended to prevent financial incentives tied to election results from affecting public trust in the voting process.
Kalshi operates as a platform that allows users to place money on the likelihood of future events, commonly described as a prediction market. The model allows users to trade on expected outcomes rather than place fixed wagers on game results. Similar platforms have faced regulatory scrutiny in recent years as authorities examine how these markets fit within existing gambling and financial laws.
