Arizona Attorney General Kris Mayes filed criminal charges against prediction market platform Kalshi on March 17, 2026. The state accuses Kalshi of operating an illegal gambling business by allowing residents to bet on professional and college sporting events. This legal action escalates the growing conflict between states and prediction markets that have expanded beyond political betting into mainstream gambling activities.

Kalshi denied the allegations, calling them "meritless" and "seriously flawed." The company has recently filed federal lawsuits against Arizona, Iowa, and Utah rather than complying with state regulations. Prediction markets like Kalshi and Polymarket have grown from niche political betting platforms to mainstream gambling venues, raising concerns about market manipulation and insider trading.

The criminal charges mark a significant escalation from civil disputes to criminal prosecution. Kalshi argues prediction markets should be regulated by the Commodity Futures Trading Commission rather than state gambling authorities. The case raises fundamental questions about how prediction markets should be classified under existing laws, with states asserting gambling regulations apply while platforms claim they function as financial marketplaces.