Kalshi Faces Lawsuits and Criminal Charges in Escalating Battle with States Over Prediction Markets

The outcome will shape the future of sports betting in America as the Trump administration backs Kalshi against bipartisan state efforts to shut it down.

Apr. 6, 2026 at 3:34pm

Got story updates? Submit your updates here. ›

A minimalist studio still life photograph featuring a stack of legal documents, a gavel, and a sports betting ticket arranged on a clean, monochromatic background, symbolizing the abstract concepts of corporate strategy, finance, risk, and the regulatory battle over the future of sports betting.The escalating legal battle between prediction market platform Kalshi and state gaming regulators could reshape the future of sports betting in America.Nevada Today

Kalshi, a federally regulated prediction market platform, is embroiled in more than 30 lawsuits with states across the country over its sports event contracts. States argue Kalshi is operating an unlicensed sportsbook, while Kalshi claims federal law preempts state gambling regulations. The legal battle has escalated to criminal charges in Arizona and bipartisan legislation in Congress, with the Trump administration siding with Kalshi against the states.

Why it matters

The outcome of this legal war will determine whether prediction markets become a permanent, legal alternative to traditional sportsbooks or are forced to comply with the same state-by-state licensing framework. This could fundamentally reshape the entire American sports betting landscape, especially in states without legal sports betting.

The details

Kalshi is a commodity exchange registered with the Commodity Futures Trading Commission that allows customers to trade event contracts, including on sports outcomes. States see Kalshi as an unlicensed sportsbook, arguing it should pay taxes, submit to licensing, and follow responsible gambling requirements like regulated operators. Kalshi says federal law preempts state gambling regulations. Courts have split on this core issue, with some siding with Kalshi and others with the states. The situation escalated with criminal charges against Kalshi in Arizona and the Trump administration filing briefs supporting Kalshi against the states.

  • In April 2025, Kalshi initially won a preliminary injunction in Nevada.
  • In November 2025, a federal judge in Nevada reversed the injunction, ruling Kalshi's sports contracts 'closely resemble' traditional sportsbook bets.
  • In March 2026, a Nevada state court issued a temporary restraining order blocking Kalshi from offering sports, politics, and entertainment contracts in the state.
  • On March 17, 2026, Arizona Attorney General Kristin Mayes filed 20 criminal misdemeanor charges against Kalshi.
  • In April 2026, the 9th Circuit will hear the Nevada appeals case, and in May 2026, the 4th Circuit will hear the Maryland case.

The players

Kalshi

A federally regulated prediction market platform that allows customers to trade event contracts, including on sports outcomes.

Tarek Mansour

The CEO of Kalshi, who has famously stated that 'State law doesn't really apply' to the company's operations.

Donald Trump Jr.

A strategic advisor to both Kalshi and Polymarket, a competing prediction market platform.

Michael Selig

The Chair of the Commodity Futures Trading Commission, which has filed amicus briefs supporting Kalshi against state efforts to shut it down.

Kristin Mayes

The Attorney General of Arizona, who has filed 20 criminal misdemeanor charges against Kalshi.

Got photos? Submit your photos here. ›

What they’re saying

“To those who seek to challenge our authority in this space, let me be clear — we will see you in court.”

— Michael Selig, Chair, Commodity Futures Trading Commission

“It is astonishing and appalling that Major League Baseball would, in effect, be complicit in this. The broader industry push to normalize sports prediction markets is a form of what I describe as an 'addiction conspiracy.'”

— Richard Blumenthal, U.S. Senator

What’s next

The 9th Circuit will hear the Nevada appeals case in April 2026, and the 4th Circuit will hear the Maryland case in May 2026. Legal observers expect the circuit split to eventually require Supreme Court intervention to resolve the core issue of whether federal law preempts state gambling regulations.

The takeaway

This legal battle over prediction markets could fundamentally reshape the entire American sports betting landscape, with high stakes for both bettors and the industry. The outcome will determine whether prediction markets become a permanent, legal alternative to traditional sportsbooks or are forced to comply with the same state-by-state licensing framework.