Arizona attorney general Kris Mayes has filed 20 misdemeanour charges against Kalshi for allegedly operating an illegal gambling business in the state and accepting bets on elections.
The case comes amid a wide-ranging series of legal battles across the US between states and prediction market operators, but marks the first criminal action faced by the business.
Mayes said: “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. No company gets to decide for itself which laws to follow.”
The charges, filed on 16 March in the superior court of the state of Arizona and for the county of Maricopa, allege that Kalshi accepted bets from Arizona residents on a range of events without a licence, in violation of state law.
The filing includes 16 counts of betting and wagering, classified as class 1 misdemeanours, and four counts of election wagering, classified as class 2 misdemeanours.
Lawsuit highlights sports, political betting
The alleged conduct spanned sporting events, proposition bets on individual player performance, and political markets.
Among the specific bets cited were wagers on the 2028 US presidential race, the 2026 Arizona gubernatorial contest, the 2026 Arizona Republican gubernatorial primary, and the 2026 Arizona secretary of state race, as well as a $1 bet on whether the SAVE Act would become law.
On 12 March, ahead of the charges being filed, Kalshi sued the state of Arizona following on from the Grand Canyon State sending it a cease-and-desist letter last year.
Mayes added: “Arizona will not be bullied into letting any company place itself above state law.”