A federal judge has rejected a bid from Kalshi to block Arizona prosecutors from pursuing a criminal case against it.
Last month, Kalshi filed a lawsuit against Arizona attorney general Kris Mayes and several state officials. This sought to invalidate state efforts to restrict the operator from offering prediction markets to Arizona residents.
Days later, Mayes responded by filing 20 misdemeanour charges against Kalshi for allegedly operating an illegal gambling business and accepting bets on elections. This marked the first criminal action against Kalshi for activities related to wagering.
The pendulum has now seemingly swung in favour of Arizona following the latest ruling on 8 April.
US District Judge Michael Liburdi denied Kalshi’s request to block criminal action from the state. Liburdi also rejected Kalshi’s argument federal law should overrule gambling laws in Arizona. He said it was too early in the case to make a judgment on such a request.
An arraignment is set to take place on 13 April for Kalshi in Maricopa County Superior Court. Neither Kalshi nor Mayes have commented on the ruling.
Uncertainty remains over Kalshi
Kalshi has been under scrutiny across several states in recent months, with concerns raised over its perceived links to wagering. However, the operator has maintained that its focus remains on prediction markets.
The key difference, it has argued, is that unlike placing a bet in the traditional way, users are required to select ‘yes’ or ‘no’ and then enter their stake. This can be applied to sports as well as various political, economic, weather and cultural markets.
So far, Kalshi has had mixed success with its defence to legal challenges. Last week, it was dealt a blow when a Nevada judge extended restrictions on the operator. This prevented it from offering event-based contracts to state residents without a gaming licence.
However, earlier this week, a federal appeals court ruled that New Jersey regulators cannot block sports-linked contracts offered by Kalshi. As such, the operator can continue to run such contracts in the state.
Kalshi’s popularity has increased in recent years along with the rise in demand for prediction markets. This has thrust Kalshi increasingly into the spotlight, with the latest development seeing it enter a data partnership with Fox Corporation.