Arkansas Attorney General Tim Griffin has sued Kalshi, accusing the prediction-market operator of running an illegal, unregulated gambling platform in violation of the Arkansas Deceptive Trade Practices Act.

Prediction markets let users trade event contracts whose payouts depend on whether a specific outcome — a game's result, for instance — actually occurs. Whether that activity amounts to federally regulated financial trading or state-licensed gambling is the question dividing courts and regulators across the country.

The lawsuit, filed against KalshiEX LLC and Kalshi Inc., seeks restitution, penalties, taxes and an injunction. Griffin said 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.

The attorney general announced the case on Wednesday. The state’s official announcement is available at arkansasag.gov.

Today I filed a lawsuit against @Kalshi for violating the Arkansas Deceptive Trade Practices Act by operating an unregulated gambling platform. Kalshi has built a global business that it calls a prediction market, allowing consumers to wager money on the outcome of just about… pic.twitter.com/ePycNKXzy6 — Attorney General Tim Griffin (@AGTimGriffin) November 4, 2026

“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.”

“Arkansas law is concerned with substance, not semantics,” he added.

Griffin also cited Kalshi’s responsible-gambling tools—including self-exclusion, deposit limits and trading breaks—and its partnership with the National Council on Problem Gambling. He said those measures indicate that Kalshi recognizes its platform carries gambling-style risks.

“Although Kalshi insists that its products are not gambling, its actions speak louder than its labels,” Griffin said.

Kalshi is regulated by the Commodity Futures Trading Commission. In other cases, the company has argued that its event contracts fall under the federal government’s exclusive jurisdiction and therefore are not subject to state gambling laws. The distinction carries practical weight: if event contracts are treated as federally regulated derivatives, state gambling rules do not reach them; if they are treated as gambling, operators must obtain state licenses, pay state taxes and observe state age restrictions.

Arkansas is the latest of more than a dozen states to challenge prediction markets in court. The CFTC, meanwhile, has sued at least 10 states to defend what it says is its exclusive authority over the sector.

Where the state fights stand

Among the most significant cases are:

• Utah: The state filed felony charges against Kalshi and its co-founders, Tarek Mansour and Luana Lopes Lara, last 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 responded by invoking its emergency powers to keep Kalshi operating.
• Michigan: A state judge barred Kalshi from offering sports contracts in September and threatened a $500,000 daily fine if the company 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 the state’s first-in-the-nation law making it a felony to operate or advertise a prediction market. In July, a federal judge blocked the ban from taking effect, finding that it was likely preempted by federal law.
• Illinois: Kalshi sued the state in June over a new law requiring prediction markets to obtain sports-betting licenses and pay state taxes.

Other states have also taken action. Arizona filed criminal charges against Kalshi in March, a Washington court temporarily blocked its sports contracts in July, and a Massachusetts case is now before the state’s highest court after a lower court barred Kalshi’s sports contracts in January.

The dispute has also produced conflicting federal appeals-court rulings. In April, the Third Circuit ruled that New Jersey could not regulate Kalshi’s sports contracts. The Sixth and Ninth Circuits, however, sided with Ohio, Tennessee and Nevada. That split leaves the contracts subject to different legal treatment in different parts of the country.

New Jersey has asked the Supreme Court to resolve the issue, with support from 39 other states and the District of Columbia, as well as the NFL. Kalshi’s response to the petition is due November 9. The Supreme Court is not expected to decide whether to take up the case until December at the earliest, ESPN reported.

President Donald Trump has backed the CFTC in the dispute and called several state officials who challenged prediction markets “scum.”