Arizona AG Files Criminal Charges Against Futures Trading Platform Kalshi

Arizona Attorney General Kris Mayes on March 17 filed charges against prediction market platform KalshiEX LLC and Kalshi Trading LLC for running an illegal and unlicensed gambling and election wagering business in the state.

The 20-count indictment alleges that Kalshi took bets from Arizona residents on a wide range of events, including professional sports, prop bets on individual player performances, and other forms of wagering, and also took bets on upcoming state and national political races.

San Francisco-based Kalshi, meanwhile, contends that it’s not a betting platform but rather a federally regulated exchange for trading and hedging futures contracts more akin to TD Ameritrade, Ninja Trade, or E*Trade than a sportsbook.

“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,” Mayes said. “No company gets to decide for itself which laws to follow.

“Arizona will not be bullied into letting any company place itself above state law,” Mayes said.

Kalshi was founded in 2018 by Tarek Mansour and Launa Lopes Lara when the two were students at the Massachusetts Institute of Technology. In November 2020, Kalshi received the Designated Contract Market designation from the federal Commodities Futures Trading Commission (CFTC). 

Among the charges brought by the state of Arizona are multiple counts of running an illegal gambling operation after Kalshi allegedly took bets on Arizona State University and University of Arizona basketball games in February, and allegedly took bets placed on multiple professional NBA basketball games. Kalshi also allegedly accepted bets on individual player performances and the final outcome of the Super Bowl played between the Seattle Seahawks and New England Patriots on Feb. 8.

Additional charges stem from bets allegedly placed on whether or not Tesla CEO Elon Musk would attend the Super Bowl in person, if the SAVE Act would be passed into law, and if the Republican Party would retain control of the U.S. House of Representatives in the 2026 midterm elections.

The Arizona Attorney General also filed four counts against Kalshi for election wagering. Kalshi is alleged to have accepted bets on the 2026 gubernatorial primary in July and general election for state governor on Nov. 3, the 2026 race for Arizona Secretary of State, and the presidential race in 2028, the state attorney general said. 

In an interview with Bloomberg on March 18, Kalshi CEO Mansour accused the state of Arizona of overstepping its authority by filing criminal charges against the company, which has nearly 400,000 customers in Arizona.

“The whole point of federal regulation of these financial exchanges is to prevent this sort of chaos and [these] sort of attacks on these businesses that could be political in nature or other, and that’s a very important distinction,” Mansour said.

“We spent four years getting regulated by the federal government, and we have a federal government in the CFTC that is coming strongly in favor of our position. Filing these charges is a total overstep and an overreach,” he said.

In a statement provided to The Epoch Times, Elisabeth Diana, head of communications at Kalshi, said, “If this were about consumer protection, the state [of Arizona] would focus on predatory practices of the gambling industry’s addiction-driven business model. Instead, a regulated exchange is being targeted to protect incumbents and prevent consumers from choosing.”