Originally published by Decrypt on November 5, 2026, at 18:28:58 UTC+8. This account reflects the legal disputes as reported at that time.
Arkansas sued prediction-market operator Kalshi, alleging that it offered residents an illegal, unregulated gambling platform. Attorney General Tim Griffin announced the action on November 4, 2026.
The lawsuit names KalshiEX LLC and Kalshi Inc., alleges multiple violations of the Arkansas Deceptive Trade Practices Act, and seeks restitution, penalties, taxes and an injunction. These are the state’s allegations, not findings that Kalshi violated the law.
The dispute turns on a question already dividing courts: Are Kalshi’s event contracts governed exclusively by federal commodities regulation, or can states regulate them as gambling?
What Arkansas alleges
Griffin alleged that Kalshi let Arkansas residents as young as 18 wager on sports and entertainment events without obtaining gambling 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 pointed to Kalshi’s self-exclusion options, deposit limits, trading breaks and partnership with the National Council on Problem Gambling. In his view, those measures demonstrate that the company recognizes gambling-style risks, regardless of how it labels its products.
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 are not subject to state gambling laws. The supplied report did not include a Kalshi response specific to the Arkansas lawsuit.
A widening set of state challenges
Arkansas joined more than a dozen states challenging prediction markets. Decrypt’s report outlined several major disputes:
- Utah: The state filed felony charges against Kalshi and co-founders Tarek Mansour and Luana Lopes Lara the week before the report, 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 Kalshi 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 what the report described as the country’s first law making it a felony to operate or advertise a prediction market. A federal judge blocked the ban in July, finding that federal law likely preempted it.
- Illinois: Kalshi sued the state in June over a law requiring prediction markets to obtain sports-betting licenses and pay state taxes.
Arizona also filed criminal charges against Kalshi in March. A Washington court temporarily blocked its sports contracts in July, while Massachusetts’ case 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 were split. 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 question, with support from 39 other states, the District of Columbia and the NFL. According to ESPN, Kalshi’s response was due November 9, and the Court was not expected to decide whether to hear the case until December at the earliest.
The unresolved issue is regulatory authority. Arkansas argues that Kalshi’s products amount to gambling under state law; Kalshi’s position in other cases is that federal oversight displaces those restrictions. The reported lawsuits and conflicting rulings did not establish a nationwide resolution.