Arkansas Calls Kalshi’s Bluff as the Prediction-Market Showdown Heads to the High Court

Arkansas sued Kalshi on Wednesday, accusing the prediction market operator of running an illegal, unregulated gambling platform in violation of the Arkansas Deceptive Trade Practices Act. The lawsuit, filed against KalshiEX LLC and Kalshi Inc., seeks restitution, penalties, taxes and an injunction. “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 wrote on November 4, 2026.

Griffin said the state’s objection concerned wagering rather than the label applied to the contracts. “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.” Instead of obtaining gambling licenses and paying required taxes, Kalshi opened its platform to Arkansas residents as young as 18 and encouraged betting on sporting and entertainment events, the state alleged.

“Arkansas law is concerned with substance, not semantics,” Griffin said. He cited Kalshi’s self-exclusion, deposit-limit and trading-break tools, along with its partnership with the National Council on Problem Gambling, as evidence that the company recognizes 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. Arizona filed criminal charges against Kalshi in March, a Washington court temporarily blocked its sports contracts in July, and Massachusetts’ case is now before the state’s highest court after a lower court barred Kalshi’s sports contracts in January.

The CFTC has sued at least 10 states to defend what it says is its exclusive authority over prediction markets, and President Donald Trump has backed the agency, calling several state officials who challenged the platforms “scum.” Federal appeals courts remain divided: the Third Circuit ruled in April that New Jersey cannot regulate Kalshi’s sports contracts, while the Sixth and Ninth Circuits sided with Ohio, Tennessee and Nevada. New Jersey has asked the Supreme Court to settle the question, backed by 39 other states and the District of Columbia, as well as the NFL. Kalshi’s response to the petition is due November 9, and the Supreme Court is not expected to decide whether to take up the case until December.