Arkansas Attorney General Tim Griffin has filed a lawsuit against KalshiEX LLC and Kalshi Inc., the companies behind the prediction market platform Kalshi, alleging the operation offers illegal gambling services to Arkansas residents. The lawsuit, announced Wednesday, seeks restitution, penalties, taxes, and injunctive relief for alleged violations of the Arkansas Deceptive Trade Practices Act.
Kalshi allows participants to trade contracts tied to the outcomes of various events, including elections, sporting competitions, and entertainment shows. Griffin contends that these activities constitute gambling under Arkansas law, regardless of how the platform markets its services.
“Arkansas law is concerned with substance, not semantics, and in Arkansas, gambling is regulated to protect consumers,” Griffin said in a statement announcing the lawsuit.
According to Griffin, Kalshi made its platform accessible to Arkansas users, some as young as 18, without obtaining the licenses, adhering to the restrictions, or paying the taxes required of legal gambling operators in the state. He alleged that Kalshi encouraged users to wager money on event outcomes and profited from those transactions.
Griffin further noted that Kalshi incorporates features commonly associated with gambling platforms, such as self-exclusion tools, deposit limits, and breaks from trading, as well as promoting resources for gambling addiction. He referenced the company’s partnership with the National Council for Problem Gambling as further evidence of its alignment with gambling activities.
The attorney general argued that the platform creates risks for users, including financial losses, excessive wagering, and mental health consequences.
While Kalshi markets itself as a financial exchange and notes it is regulated by the U.S. Commodity Futures Trading Commission as a designated contract market, Griffin argues that federal oversight does not exempt the platform from compliance with Arkansas statutes on gambling and deceptive trade practices.
The allegations against Kalshi are civil claims, not judicial findings. A copy of the lawsuit has been made available by Griffin’s office.
Griffin said his office will continue to target entities that attempt to bypass state safeguards designed to protect consumers.