PHOENIX — Attorney General Kris Mayes is turning the tables on a company that takes online bets on future events, charging it with multiple violations of state gaming laws.
In a new legal filing, the attorney general cites 20 different instances where she says that KalshiEX LLC has allowed people in Arizona to wager on various events.
Some of these are on sports, both professional and college. And that, according to Mayes, runs afoul of statutes that specifically limit such wagering to companies and tribes that have an agreement with the state.
A few of the charges relate to sports-connected events.
For example, the criminal complaint filed in Maricopa County Superior Court says Kalshi took a wager on whether Elon Musk would attend the Super Bowl. The legal papers say that is prohibited by general statutes that bar placing events on "any unknown or contingent future event or occurrence whatsoever.''
And then there are several instances where Mayes said that Kalshi was offering to let people wager on some future political event, like whether J.D. Vance would be elected president in 2028. She said there actually are specific statutes, beyond the general prohibition against gambling, that make it a crime to place bets on elections.
The lawsuit comes less than a week after Kalshi filed its own complaint in federal court.
Arizona Attorney General Kris Mayes
The company wants U.S. District Court Judge Michael Liburdi to rule that every one of the wagers it takes is not gambling but instead more akin to trading futures on commodities. And that, its lawyers contend, place its activities out of reach of state authorities.
Mayes, in filing criminal charges, clearly is not buying it.
But what also is of note is that the attorney general already was busy gathering evidence against Kalshi even before the company went to federal court: The 20 crimes that the company is accused of violating are based on wagers actually made a month ago or more by undercover state agents.
The litigation has been a long time coming.
Kalshi was founded nearly a decade ago by Tarek Mansour and Lunana Lopes Lara, both MIT graduates, it is designed to allow people to place wagers on things that have not yet happened. More recently, it has expanded its options to include political and election-related events.
But the company, seeking to avoid a host of laws against gambling, got itself approved by the Commodity Futures Trading Commission. And, as it describes its activities, it allows people to purchase event "contracts,'' putting down money on whether a specific future event will happen.
Not true, Mayes said.
"Kalshi may brand itself as a 'prediction market,' '' she said in a prepared statement.
"But what it's actually doing is running an illegal gambling operating and taking bets on Arizona elections, both of which violate Arizona law,'' Mayes said. "No company gets to decide for itself which laws to follow.''
And what she has to back that up are those contracts — or wagers — on future events that were made by her undercover agents.
One, for example, was who would win the Feb. 14 women's basketball game between the University of Arizona and Arizona State University.
The wagering fluctuated all day, with 91% of those betting as of 2 p.m. that day that the UA would win. That meant anyone placing a bet at that hour would wager 91 cents in hopes of winning a dollar; ASU backers got a contract for 9 cents.
As it turned out, ASU won 75-69 in an event where $176,683 was at stake — $1 of that placed by an undercover investigator — not counting the fixed fee that Kalshi takes. Mayes takes the position that, however Kalshi structures it and whatever it calls it, it was illegal to let anyone bet on it.
The lawsuit does not say on which school's basketball team Mayes' investigator placed money.
Other contracts are still pending over things that have yet to be decided.
One, for example, is whether Congress will enact the Safeguard American Voter Eligibility Act to require proof of citizenship to vote. So far, according to the Kalshi website, only about 10% of those who have so far put up $2.3 million are willing to bet there will be action on the SAVE Act, as it is better known.
And then Mayes cites the current political bets, ranging from a generic question of which party will control the House of Representatives after the 2026 election — more than 80% currently think it will be the Democrats — to whether the Democratic or Republican candidate for secretary of state will win. For the moment, the line on the Kalshi website shows strong wagering on the Democrat — incumbent Adrian Fontes is the only one seeking the party nomination — versus just 15% who think it will be whoever survives the GOP primary between Alexander Kolodin and Gina Swoboda.
All of that, Mayes said, is illegal.
The violations of wagering on elections carry a maximum fine of $10,000. The other incidents are can result in $20,000 fines.
Kalshi is hoping to bypass having to deal with any of this by filing the federal court case. There, the company is asking Liburdi to issue a temporary injunction barring the state from taking any action against it.
But federal judges generally avoid such orders when there are state criminal charges pending. And, absent some other order from the federal court, that will force attorneys for Kalshi to appear in Maricopa County Superior Court at a yet-to-be-set date to answer the charges.
The legal spat is not unique to Arizona.
Kalshi has convinced federal judges in several other states to at least temporarily enjoin criminal probes against it. But similar attempts in other federal courts have been rejected.
