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The prediction market Kalshi currently accepts those from the state of Arizona.
On Tuesday, Arizona Attorney General Kris Mayes announced the state has filed 20 misdemeanor charges against Kalshi, accusing it of operating an illegal gambling business in Arizona without a license as well as for election wagering.
The case is sending shock waves across the gambling sphere on Tuesday and it comes as the Arizona Wildcats enter this year's NCAA Men's College Basketball Tournament as a No. 1 seed and promises a payout of $340 for every $100 bet to win the Championship.
"Kalshi may brand itself as a 'prediction market,' but what it's actually doing is running an illegal gambling operation and taking bets on Arizona elections, both of which violate Arizona law," said Mayes. "No company gets to decide for itself which laws to follow."
To be clear, those trading on Kalshi from Arizona will not be prosecuted from doing so. This action is being taken against Kalshi, which contends it is fully legal to operate in the state by way of being licensed by the Commodity Futures Trading Commission (CFTC) as a Designated Contract Market (DCM).
“Kalshi is not a gambling site… It’s a marketplace,' argues Kalshi CEO Tarek Mansour. Unlike a traditional gambling site, “prediction markets don’t make money off somebody’s losses," Mansour says.
The current Commodity Futures Trading Commission chair, Michael S. Selig has vowed to take on US states that try to prevent prediction markets from operating in their respective jurisdictions.
(pictured) Attorney General of Arizona Kris Mayes
“Event contracts allow businesses and individuals to hedge event-driven risks, enable investors to manage portfolio exposure, and provide the public with information about the outcome of future events," Selig stated.
“To those seeking to challenge the Commission’s jurisdiction over these contracts… we’ll see you in court," he added.
Arizona regulates sports betting in the state. It currently licenses 13 sportsbooks, both online and via retail establishments where applicable.
Offshore sportsbooks, local bookies, sweepstakes sites and daily fantasy sports sites have long been accessible from the state but are not regulated there.
Kalshi Available for March Madness
Thus far, Kalshi has registered more than $72 million on this year's NCAA Men's College Basketball Tournament with 17% of those trading believing that the Arizona Wildcats will win the title.
Arizona will come into this week's tournament facing Long Island University as a -31.5 favorite after beating Houston Saturday night.
The Wildcats haven’t been to the Final Four since 2001, but have the type of team that could end that streak.
Arizona (32-2) has a big, balanced roster that’s had seven different leading scorers and a defense that’s as physical as any in the country. The Wildcats opened the season by knocking off reigning national champion Florida and kept taking down ranked opponents all season.
Arizona beat 15 teams that were ranked at the time — that’s 46% of its wins — and rolls into the NCAA Tournament on a nine-game winning streak since its only two losses of the season. The Wildcats took down No. 7 Iowa State on Jaden Bradley’s buzzer beater in the Big 12 semifinals and outlasted No. 5 Houston 79-74 in the title game to sweep the Big 12 championships their second season in the league.
- Don Shapiro, Gambling911.com
