Arkansas Sues Kalshi, Calling Its Sports Contracts Unlicensed Gambling Open to 18-Year-Olds

Arkansas sued Kalshi on Wednesday, accusing the prediction market of running an unlicensed sports-betting business that took wagers from residents as young as 18. Attorney General Tim Griffin is seeking restitution, civil penalties, unpaid taxes and an injunction against the company.

The case makes Arkansas the seventh state to charge, sue or restrict Kalshi, according to a CoinDesk tally. The company has drawn significant regulatory pressure because it holds most of the prediction market, taking 82% of a record $72.3 billion in combined prediction-market volume in September, 16 times the level from a year earlier.

State Actions Against Kalshi

States have employed different legal tools against Kalshi, with remedies ranging from back taxes to criminal convictions. Arizona opened the criminal route in March, charging Kalshi with running an illegal gambling business. Utah followed with criminal charges against the company and its co-founders after filing a civil suit.

Other states are seeking substantial financial penalties. New York has asked a state court for at least $36 billion, while Nevada regulators want $120,000 a day over contracts they say bypassed Kalshi's geofence. Arkansas adds a tax bill to that list, requesting the court order Kalshi to pay gambling taxes for every year it served Arkansas customers.

Kalshi's Tools as Evidence

The 57-page complaint, filed under the Arkansas Deceptive Trade Practices Act, turns Kalshi's own consumer protections against it. It lists self-exclusion tools, deposit limits, trading breaks and a partnership with the National Council for Problem Gambling as evidence that Kalshi operates as a gambling business.

Kalshi insists its products are not gambling, but 'its actions speak louder than its labels,' Griffin said in a statement.

The complaint also cites Kalshi's acknowledgment that nearly three times as many users lose money as make money on its markets, calling it 'a pocket-sized bookie' for most offerings. Age restrictions are central to the case, as Arkansas allows casino gaming and sports wagering only for people 21 and older, while Kalshi accepts traders from 18.

Traders aged 18 to 20 moved an estimated $5.4 billion on Kalshi this year through late August. The company recently added deposit limits, extra monitoring and parent-linked accounts for this age group.

Federal Regulator Pushes Back

The Commodity Futures Trading Commission (CFTC), which oversees Kalshi as a designated contract market, is fighting the states in court. On October 27, it sued Utah, becoming the tenth state it has taken to court over prediction markets.

CFTC Chairman Michael Selig stated that Congress gave the agency 'sole responsibility to oversee these markets.' Legal battles continue as appeals courts have issued conflicting rulings: the Third Circuit sided with Kalshi in New Jersey's case, while the Ninth Circuit ruled for Nevada. New Jersey has asked the Supreme Court to resolve the split.

Griffin's office established its position more than a year ago, with a formal opinion from October 2025 declaring that a business model like Kalshi's constitutes gambling requiring a state license. Kalshi has previously argued that its sports contracts are swaps regulated by the CFTC, not bets. The case was filed in the Circuit Court of Independence County, with the state requesting a jury trial.