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Arizona sues Kalshi for allegedly allowing bets on state elections

By
Published  March 17, 2026 3:06pm MST
Kris Mayes
FOX 10 Phoenix

The Brief

    • Arizona Attorney General Kris Mayes has filed criminal charges against Kalshi, accusing the prediction market of operating an illegal gambling business and allowing unlawful bets on Arizona elections.
    • The 20-count misdemeanor filing alleges Kalshi accepted wagers on professional sports, player performances, and several 2026 Arizona political races, which Mayes claims violates state law.
    • The legal battle follows a separate controversy where traders sued Kalshi for allegedly dodging payouts related to the death of Iran’s Supreme Leader earlier this year.

PHOENIX - Arizona Attorney General Kris Mayes is suing KalshiEx LLC and Kalshi Trading LLC, the companies behind the Kalshi prediction markets platform. 

What we know:

Mayes' office has filed criminal charges accusing the betting site of operating an illegal gambling business and unlawfully allowing people to bet on Arizona elections.

According to Mayes, Kalshi's actions "violate Arizona law," as the filing accuses Kalshi of 20 counts— all misdemeanors. It alleges that Kalshi accepted bets from residents including professional and college sporting contests, bets on player performances, the 2028 presidential race, amd several 2026 races in Arizona. 

This comes after Kalshi sued Arizona on March 12 so it could operate in the state.

What they're saying:

"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," said Attorney General Mayes. "No company gets to decide for itself which laws to follow," Mayes' office wrote in a statement.

The backstory:

The use of prediction markets like Kalshi has exploded in recent years. They have been subject to several controversies and lawsuits in that time, specifically regarding their wagers on sensitive, geopolitical events like the U.S. military action in Venezuela and the wars in Gaza and Iran.

Earlier this month, a group of traders sued Kalshi after accusing the company of trying to dodge payouts on bets tied to Iran's supreme leader. 

According to the lawsuit, Kalshi was taking bets on whether Iran's supreme leader would leave office before March 1. After he was killed on Feb. 28, Kalshi invoked a fine-print clause that specified if the supreme leader's removal happened via death, the contract would not pay out.

Dig deeper:

Traders claim that clause was not properly disclosed, while Kalshi's CEO has defended the policy and says the company reimbursed all fees from the "Khamenei" market.

 Kalshi is already subject to federal regulation. The same independent commission that oversees U.S. derivative markets also oversees Kalshi.

To view the entirety of the filing, click here.

The Source: Attorney General Kris Mayes

Kris MayesArizonaCrime and Public SafetyNews