Arkansas Attorney General Tim Griffin filed a lawsuit against KalshiEX LLC and Kalshi Inc. on Wednesday, alleging the prediction market operates an unregulated gambling platform in violation of the Arkansas Deceptive Trade Practices Act. The complaint in Independence County seeks restitution, penalties, taxes and an injunction.
Griffin described Kalshi as a "pocket-sized bookie" and pointed to the platform's availability to users as young as 18, real-money wagering on sports and entertainment outcomes, and the absence of state gambling licenses and taxes. "It doesn't take a genius to understand that wagering money on whether the Razorbacks win or lose is gambling," Griffin said, adding that "gambling on an unregulated platform is squarely prohibited by Arkansas law."
The AG argued Kalshi's own responsible-gambling features — self-exclusion tools, deposit limits, trading breaks and a partnership with the National Council on Problem Gambling — show the company recognizes gambling-style risks. "Although Kalshi insists that its products are not gambling, its actions speak louder than its labels," he said.
The Arkansas action landed one day after the U.S. midterm elections, overshadowing a victory lap by Kalshi CEO Tarek Mansour. The platform said its odds correctly forecast 98% of listed races, and Americans wagered more than $1.3 billion on the midterms. Kalshi recently raised about $1 billion at a $40 billion valuation, though roughly 80% of its trading volume comes from sports contracts — the very category states are challenging.
Kalshi, regulated by the Commodity Futures Trading Commission, maintains its event contracts are federally regulated derivatives outside state gambling law. But courts are split: the Third Circuit sided with Kalshi, while the Sixth and Ninth Circuits backed Ohio, Tennessee and Nevada. New Jersey has asked the Supreme Court to resolve the conflict, with support from 39 states, the District of Columbia and the NFL. Kalshi's response is due November 9, and the Supreme Court is not expected to decide whether to take the case until December at the earliest.
The Arkansas lawsuit is part of a widening battle. Utah filed 13 felony charges and a misdemeanor against Kalshi and co-founders Tarek Mansour and Luana Lopes Lara on October 28. New York sued in July seeking at least $36 billion, Michigan barred sports contracts in September under threat of a $500,000 daily fine, and Kentucky sued Kalshi, Polymarket and brokerage partners Coinbase, Robinhood and Webull in June. The CFTC has sued at least 10 states to defend its jurisdiction, and President Donald Trump has backed the agency.
