In the Wild West days of illegal gambling, a shootout was inevitable.
It’s happening, metaphorically, in Arizona. Via Reuters, Attorney General Kris Mayes has filed criminal charges against prediction-market platform Kalshi for running an illegal gambling operation.
“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 statement.
Kalshi responded by saying that “a state can file criminal charges on paper-thin arguments,” and that its business (which it claims is different from sportsbooks) “should not be overseen by a patchwork of inconsistent state laws.”
The core question is whether prediction markets fall within the exclusive federal jurisdiction of the Commodity Futures Trading Commission, which would preempt efforts by the states to prevent or limit their activities.
“States like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do it,” Kalshi said.
The 20 counts against Kalshi claim that it has violated Arizona law by taking bets on events such as college sports, pro sports, and state and national elections.
On Monday, a federal judge denied a Kalshi request for a temporary restraining order that would have blocked the criminal charges.
Hopefully, Kalshi is now taking bets on the outcome of its federal civil case — and of the state criminal prosecution against the company.
