Arkansas Sues Kalshi Over Alleged Illegal Gambling Platform

Arkansas has become the latest state to take Kalshi to court. Attorney General Tim Griffin sued the prediction market on Wednesday, November 4, alleging the company runs an illegal gambling platform in the state. The suit joins a growing list of state actions testing whether state gambling law reaches event contracts that Kalshi says belong to federal regulators.

In a statement announcing the lawsuit, Griffin said Kalshi has built a global business that lets users wager on the outcome of "just about anything." He used sports betting to make the case under state law.

"It doesn't take a genius to understand that wagering money on whether the Razorbacks win or lose is gambling,"

Griffin said such wagering is "squarely prohibited" by Arkansas law. He also rejected the company's framing of its products:

"Although Kalshi insists that its products are not gambling, its actions speak louder than its labels,"

The attorney general further alleged the platform carries risks including excessive wagering, financial losses, depression and other mental health harms. The state seeks restitution, unpaid taxes and civil penalties.

Kalshi's federal defense

Kalshi has argued in other lawsuits that its event contracts are derivatives regulated by the Commodity Futures Trading Commission (CFTC), and therefore not subject to state gambling statutes. The company continues to pursue federal appeals against state gambling-law enforcement.

The CFTC shares that position. In a press release, the agency set out its claim to exclusive jurisdiction over prediction markets. Chair Michael Selig put it this way:

"Congress entrusted the CFTC to be the federal regulator with sole responsibility to oversee these markets,"

The CFTC has sued at least 10 states, arguing they are intruding on its authority.

Pressure builds on Kalshi

The Arkansas filing follows a sharper escalation in Utah. Last week, Utah filed 14 criminal charges against Kalshi, CEO Tarek Mansour and COO Luana Lopes Lara, a week after the state's civil suit that also named two Susquehanna trading firms. Arkansas, by contrast, is proceeding with a civil case.

The legal fights come as the company's private valuation climbs. Kalshi recently closed a $1 billion Series G at a $40 billion valuation, even as the jurisdictional dispute with states intensifies. Its federal appeals turn on the same question Arkansas now raises: whether event contracts are CFTC-regulated derivatives or state-regulated gambling.