Financial Prediction Markets and Gambling Law

Arizona has become the first U.S. state to file a 20-count criminal complaint against prediction market Kalshi, alleging the platform operated as an unlicensed online gambling operation by accepting wagers on political outcomes (including elections), college sports and individual player performance in violation of Arizona law. The prosecution has touched off a jurisdictional clash with federal regulators—CFTC Chair Michael Selig called the criminal case "entirely inappropriate"—and a federal judge denied Kalshi’s request for a temporary block while ordering the company to show why the matter belongs in federal court, amid similar actions by at least nine other states.