The Arizona Attorney General's office recently filed criminal charges against the prediction market platform Kalshi, accusing it of operating an illegal gambling business. The indictment includes 20 criminal charges, accusing Kalshi of illegally accepting bets on political competitions, college sports, and individual player performances, in violation of Arizona state law. In plain terms, the state government has determined it to be an illegal casino and is pursuing criminal liability. Want to keep up with the latest developments in prediction market regulation? Follow PASA's official website continuously.
Criminal Charges: A state-level first, fines + asset forfeiture
The Arizona Attorney General has made it clear that Kalshi may brand itself as a "prediction market," but it actually operates an illegal gambling business. This is the first time at the state level that criminal charges have been brought against a prediction market. The criminal prosecution empowers Arizona prosecutors to pursue fines, asset forfeiture, and court orders to prevent Kalshi from operating within the state, while also granting broader authority to investigate company records and personnel.
Judicial Maneuvering: Federal judge refrains from intervening, jurisdictional dispute unresolved
Kalshi had previously filed a federal lawsuit, claiming that the Commodity Exchange Act and CFTC's exclusive regulatory authority take precedence over state gambling regulations. However, the federal judge denied Kalshi's request for a temporary restraining order to prevent Arizona's criminal actions and asked for clarification on why the court should not abstain from intervening due to the ongoing state criminal proceedings. If the "Younger abstention principle" applies, the Kalshi case will be heard only in state court, which could affect enforcement nationwide. State courts have varied opinions on this matter; a Tennessee federal judge once supported Kalshi's CFTC priority claim, while states like Ohio have dismissed similar claims. Want to know about the regulatory dynamics of prediction markets across the US? Follow PASA's official website continuously.
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This article is from "PASA-Global iGaming Leaders," a gambling industry news channel:https://t.me/pasa_news
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