Kalshi co-founder fights back against Arizona’s ‘overstep’ in what a lawyer calls a federal-state turf war
Arizona has filed 20 criminal counts against Kalshi, a prediction market platform, accusing it of operating an illegal gambling business and offering election wagering in the state.
By Francisco Rodrigues, Oliver Knight|Edited by Aoyon Ashraf Mar 18, 2026, 6:19 p.m.
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What to know:
- Arizona has filed 20 criminal counts against Kalshi, a prediction market platform, accusing it of operating an illegal gambling business and offering election wagering in the state.
- Kalshi's co-founder called the charges a "total overstep", arguing that Arizona is trying to challenge federal regulation of the platform, which is overseen by the CFTC.
- The case is part of a broader national fight between states and federally regulated prediction markets, with implications for the applicability of federal law versus state regulations.
Kalshi co-founder Tarek Mansour has called Arizona’s criminal case against the company a “total overstep,” casting the move as an attack on a federally regulated exchange rather than a standard gambling enforcement action.
Mansour said the charges “have nothing to do with gambling or the merits” and argued that Arizona is trying to short-circuit a broader court fight over who controls prediction markets. Speaking to Bloomberg, he said Kalshi will continue to defend the business even as the legal battle expands.
Kalshi didn't reply to CoinDesk's request for comments.
Arizona Attorney General Kris Mayes filed 20 criminal counts against Kalshi this week, accusing the company of operating an illegal gambling business and offering election wagering in the state.
Her office said Arizona law bars both unlicensed wagering operations and election betting.
Kalshi lets users trade contracts tied to real-world outcomes such as elections, sports and economic data. The company says those products are event contracts overseen by the Commodity Futures Trading Commission (CFTC), which recently signaled a more supportive federal stance toward these platforms. Kalshi, along with Polymarket, accounts for the lion’s share of prediction market activity, commanding more than 90% of notional volume, according to Dune data.
In a post on social media, CFTC Chairman Mike Selig called the matter a jurisdictional dispute and said criminal prosecution was “entirely 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 and entirely inappropriate as a criminal prosecution. The @CFTC is watching this closely and evaluating its options.
— Mike Selig (@ChairmanSelig) March 17, 2026
State officials in Arizona and elsewhere have argued that some of them look more like wagers and should fall under state gambling rules.
That split now sits at the center of a larger national fight involving various states, including New York, Tennessee, and Massachusetts. Most state actions against Kalshi so far have relied on cease-and-desist orders, injunction requests or civil claims. Arizona’s case goes further by bringing criminal charges.
“It’s not surprising at all that states would bring new tools to bear in attempting to chill the federally regulated markets,” Aaron Brogan, founder and managing attorney of Brogan Law PLLC, told CoinDesk. “Because there is a fundamental conflict between states, which regulate and draw tax revenue from state-regulated gambling markets, and these federally regulated markets that are outside of state control.”
To Brogan, the question is ultimately whether or not federal law applies, meaning at the end of the day, “ this is a dispute between the federal government and state government and that's where it should be determined.”
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