Kalshi co-founder Tarek Mansour called the Arizona criminal case against the company “completely out of bounds” and viewed the move as an attack on federally regulated exchanges rather than a standard gambling enforcement action.
Mansour said the charges have “nothing to do with gambling or the merits of the case” and argued that Arizona is trying to short-circuit a broader court battle over who controls prediction markets. He told Bloomberg in an interview that Kalsh would continue to defend the business even as the legal battle expands.
Kalshi did not respond to CoinDesk’s request for comment.
Arizona Attorney General Chris Meyers this week filed 20 criminal charges against Kalsi, accusing the company of operating an illegal gambling business and offering election bets in the state.
Her office said Arizona law prohibits unlicensed betting operations and election betting.
Kalshi allows users to trade contracts tied to real-world outcomes such as elections, sports, and economic data. The company said the products are active contracts regulated by the Commodity Futures Trading Commission (CFTC), which has recently signaled a more supportive federal stance toward these platforms. According to Dune data, Kalshi and Polymarket account for the lion’s share of prediction market activity, accounting for more than 90% of notional trading volume.
CFTC Chairman Mike Selig called the matter a jurisdictional dispute in a social media post and said criminal prosecution was “totally inappropriate.” He said the agency is watching closely and evaluating its options.
The Arizona Attorney General today filed criminal charges against one of our registered exchanges related to prediction markets. This is a jurisdictional dispute that is entirely inappropriate as a criminal prosecution. this @CFTC It is monitoring the matter closely and evaluating its options.
— Mike Selig (@ChairmanSelig) March 17, 2026
State officials in Arizona and elsewhere argued that some looked more like gambling and should be subject to state gambling rules.
Now, that division is at the center of a larger national fight involving several states, including New York, Tennessee and Massachusetts. To date, most state actions against Kalshi have relied on cease-and-desist orders, injunction requests or civil claims. The Arizona case leads to further criminal charges.
“It’s not surprising that states are adopting new tools to try to cool federally regulated markets,” Aaron Brogan, founder and managing attorney at Brogan Law PLLC, told CoinDesk. “Because there is a fundamental conflict between states and these federally regulated markets that are outside state control, states are responsible for regulating and generating tax revenue from state-regulated gambling markets.”
For Brogan, the question boils down to whether federal law applies, which means at the end of the day, “This is a dispute between the federal government and the state, and it’s up to the state to decide.”
