Arkansas sued Kalshi over allegations that it offered residents an illegal, unregulated gambling platform, Attorney General Tim Griffin announced on November 4, 2026. The case adds to a widening dispute over whether state gambling laws apply to federally regulated prediction markets.
The lawsuit names KalshiEX LLC and Kalshi Inc. and alleges multiple violations of the Arkansas Deceptive Trade Practices Act. Arkansas is seeking restitution, penalties, taxes and an injunction.
Arkansas challenges Kalshi’s gambling distinction
Griffin alleged that Kalshi allowed Arkansas residents as young as 18 to wager on sports and entertainment events without obtaining the licenses or paying the taxes required of gambling operators.
“It doesn’t take a genius to understand that wagering money on whether the Razorbacks win or lose is gambling,” Griffin said. “And gambling on an unregulated platform is squarely prohibited by Arkansas law.”
He also cited Kalshi’s self-exclusion options, deposit limits, trading breaks and partnership with the National Council on Problem Gambling as evidence that the company recognizes gambling-style risks on its platform.
Kalshi is regulated by the Commodity Futures Trading Commission. In other cases, the company has argued that its event contracts fall under exclusive federal jurisdiction and therefore are not subject to state gambling laws.
State challenges span lawsuits, restrictions and criminal charges
As of the original report’s November 5, 2026 publication, more than a dozen states had taken action against prediction markets. The cases included:
- Utah: The state filed felony charges against Kalshi and co-founders Tarek Mansour and Luana Lopes Lara the previous week, alleging illegal gambling promotion. Kalshi called the charges “a crazy overreach.”
- New York: Attorney General Letitia James sued Kalshi in July, seeking at least $36 billion. The CFTC invoked its emergency powers to keep the platform operating.
- Michigan: A state judge barred Kalshi from offering sports contracts in September, threatening a $500,000 daily fine if it failed to block Michigan residents.
- Kentucky: The state sued Kalshi, Polymarket and their brokerage partners Coinbase, Robinhood and Webull in June.
- Minnesota: Kalshi sued in May to block a law making it a felony to operate or advertise a prediction market—the first such law in the country. A federal judge blocked the ban in July, finding it was likely preempted by federal law.
- Illinois: Kalshi sued in June over a law requiring prediction markets to obtain sports betting licenses and pay state taxes.
Arizona filed criminal charges against Kalshi in March, while a Washington court temporarily blocked its sports contracts in July. Massachusetts’ case had reached the state’s highest court after a lower court barred Kalshi’s sports contracts in January.
Federal authority remains contested
The CFTC had sued at least 10 states to defend what it describes as its exclusive authority over prediction markets. President Donald Trump backed the agency and called several state officials challenging the platforms “scum.”
Federal appeals courts had reached conflicting conclusions. The Third Circuit ruled in April that New Jersey could not regulate Kalshi’s sports contracts, while the Sixth and Ninth Circuits sided with Ohio, Tennessee and Nevada.
New Jersey asked the Supreme Court to resolve the dispute, with support from 39 other states, the District of Columbia and the NFL. At the time of publication, Kalshi’s response to that petition was due November 9. ESPN reported that the Supreme Court was not expected to decide whether to hear the case until December at the earliest.
Original publication: November 5, 2026, at 18:28:58 UTC+08:00. Source: Decrypt’s original article.