Arizona Slaps Kalshi with Cease-and-Desist Order 

Arizona Draws a Line

Arizona’s Department of Gaming (ADG) hit prediction market platform Kalshi with a cease-and-desist order for running what the state calls unlicensed sports betting, per InGame’s first report.

Signed by ADG’s chief enforcement officer Douglas Jensen and aimed at Kalshi’s CEO Tarek Mansour, the order also targeted Robinhood and Crypto.com, marking Arizona as the seventh state to crack down on Kalshi’s sports event contracts.

The ADG’s beef is simple: Kalshi’s “event contracts,” letting users buy stakes in outcomes like NBA playoff games, are just bets in disguise.

Arizona law (A.R.S. § 5-1301(23)(a)) defines betting as risking cash on uncertain events, and “event wagering” includes sports bets placed online or in-person, per A.R.S. § 5-1301(4)(a).

Only licensed operators can roll with such activities, per A.R.S. § 5-1303(A), and Kalshi’s got no license, making its Arizona operations illegal.

“There is no meaningful difference between buying one of your offered contracts and placing a bet with any other sportsbook,” Jensen wrote, slamming Kalshi’s claim of being a Commodity Futures Trading Commission (CFTC)-regulated “innovation,”.

Dodging the Rules?

Arizona’s not buying Kalshi’s pitch that its peer-to-peer market, where users trade contracts on game outcomes, isn’t gambling. The ADG accuses Kalshi of skirting critical regulations, like age checks to block users under 21, background vetting, and problem gambling safeguards.

Jensen’s letter demands that Kalshi halt all gambling activities in Arizona immediately, warning that defiance could spark civil or criminal charges, cash forfeiture, or payouts to users who lost money, per A.R.S. §§ 13-804, 13-2314.

Unlike other states’ orders with tight deadlines, Arizona’s open-ended timeline might slow Kalshi’s rush to court.

Kalshi’s Nationwide Fight

Arizona joins Nevada, New Jersey, Maryland, Montana, Ohio, and Illinois in targeting Kalshi, with states like Connecticut and Kansas sniffing around.

Kalshi’s fighting back, arguing its CFTC oversight as a Designated Contracts Market trumps state laws,. In Nevada and New Jersey, federal courts handed Kalshi wins, issuing preliminary injunctions that block state enforcement, citing the Commodity Exchange Act’s precedent.

“Federal law allows Kalshi to offer both sports and election-based event contracts,” a Nevada judge ruled, urging states to take gripes to the CFTC. Maryland’s case is pending, but Kalshi’s batting strong.

Kalshi insists its contracts aren’t bets but financial instruments traded between users, not against a “house,”. “We are literally like a financial exchange, but the underlying trading is events,” Mansour told TechCrunch, vowing to keep operating unless the CFTC says stop.

Over 75% of Kalshi’s trading volume comes from sports, outpacing even DraftKings’ sports focus, per InGame’s Daniel O’Boyle.