Arizona has filed criminal charges against Kalshi, the site that allows users to bet on everything from Super Bowls to elections to the chances that a nuke will be used in the Middle East.

Kris Mayes, Arizona Attorney General, claims Kalshi, which calls itself a prediction market, is really an illegal gambling operation. Not only that, she says it broke the law by taking bets on Arizona elections, which is illegal there.

“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 in a press release announcing the charges. “No company gets to decide for itself which laws to follow.”

Online sports gambling is legal and regulated in 39 states, plus D.C. Arizona is one of those states. Companies like DraftKings and FanDuel have to comply by laws in order to operate in these states. Kalshi doesn’t bother even though it says it’s available everywhere.

While Arizona is the first state to go after Kalshi with criminal charges, others have used the courts to challenge the legality of the site. That includes Nevada, which vehemently protects its regulated gambling industry, where a judge blocked the site from taking bets on sports there through a temporary restraining order. Kalshi responded by suing Nevada at a Federal level.

Its lawyers have been busy countering the cease-and-desist letters from states like Illinois, Montana and Ohio, as well as lawsuits in Maryland, New Jersey and Nevada. Arizona filed a cease-and-desist letter before Mayes filed criminal charges.

Company lawyers preemptively counter-sued Arizona last week to stop the state from shutting it down.

Kalshi, of course, is denying it broke any laws, claiming because it’s regulated by the Commodity Futures Trading Commission (CFTC), states have no say concerning its legality. The company says that even though its takes bets on sports, it’s actually a Designated Contract Market (DCM), which is a financial exchange designated to trade futures, swaps, and or options on commodities, according to its website.

In 2024, Kalshi secured a win in the U.S. Court of Appeals in D.C. which ruled that the CFTC couldn’t block its election wagering under federal law. Since the ruling, the CFTC vowed it would fight for the company, claiming its has exclusive jurisdiction over prediction markets.

It’s no surprise that the American Gaming Association, which counts just about every gambling company that operates in the U.S. as members, is going after Kalshi full-throttled. The AGA was successful nuking the online poker industry in 2006, and is using their connections and power to try to shut down the prediction market sites.

“They don’t want to pay the taxes, they don’t want to undergo the compliance and provide all of the consumer protections that are required by states of operators who operate legal sports betting,” Tres York, the vice president of government relations for the association, told Stateline.

The Indian Gambling Association and the California Nations Indian Gaming Association, are also weighing legal maneuvers to limit Kalshi’s impact on their gambling products.

“This is illegal gaming,” said James Siva, chairman of CNIGA. “This is both infringement on tribal gaming exclusivity in various states as well as an undermining of overall tribal sovereignty.”