Key facts
- Arkansas Attorney General Tim Griffin said Kalshi operated an unregulated gambling platform for residents as young as 18.
- The lawsuit seeks restitution, penalties, taxes and an injunction against KalshiEX LLC and Kalshi Inc.
- Griffin cited Kalshi's self-exclusion tools and National Council on Problem Gambling partnership as evidence it knows the risks.
- Kalshi has argued in other cases that its CFTC-regulated event contracts fall under exclusive federal jurisdiction.
- More than a dozen states have taken action against prediction markets, including Utah, New York, Michigan and Kentucky.
- Kalshi's response to New Jersey's Supreme Court petition is due November 9, per ESPN.
Arkansas Attorney General Tim Griffin said on Wednesday that the state sued Kalshi, accusing the prediction market of offering an illegal, unregulated gambling platform to Arkansas residents. The lawsuit, filed against KalshiEX LLC and Kalshi Inc., alleges multiple violations of the Arkansas Deceptive Trade Practices Act. The state is seeking restitution, penalties, taxes and an injunction.
Griffin said Kalshi opened its platform to Arkansas residents as young as 18 and encouraged them to bet on sporting and entertainment events instead of obtaining licenses and 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."
Griffin pointed to Kalshi's responsible-gambling tools, including self-exclusion, deposit limits and trading breaks, and its partnership with the National Council on Problem Gambling, as evidence the company knows its platform carries gambling-style risks. "Although Kalshi insists that its products are not gambling, its actions speak louder than its labels," he said.
Kalshi, which is regulated by the Commodity Futures Trading Commission, has argued in other cases that its event contracts fall under exclusive federal jurisdiction and are not subject to state gambling laws.
Arkansas is the latest of more than a dozen states to take on prediction markets. Utah filed felony charges against Kalshi and co-founders Tarek Mansour and Luana Lopes Lara the week before, 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, and the CFTC responded by invoking its emergency powers to keep Kalshi operating.
A Michigan state judge barred Kalshi from offering sports contracts in September, threatening a $500,000 daily fine if it fails to block Michigan residents. Kentucky sued Kalshi, Polymarket and brokerage partners Coinbase, Robinhood and Webull in June. Kalshi sued Minnesota in May to block a law making it a felony to operate or advertise a prediction market; in July a federal judge blocked the ban, finding it likely preempted by federal law. Kalshi sued Illinois in June over a law requiring prediction markets to obtain sports betting licenses and pay state taxes.