Arkansas attorney general sues Kalshi over illegal gambling claims

The Arkansas attorney general filed suit against Kalshi last week, accusing the federally registered prediction market exchange of offering illegal gambling to state residents, including minors under the age threshold set by Arkansas electronic wagering regulations.

Attorney General Tim Griffin's complaint alleges Kalshi's sports event contracts constitute gambling under state law, a position Kalshi rejects. The company argues that Congress created the Commodity Futures Trading Commission as a single federal regulator precisely so that exchanges operating under CFTC registration could conduct business under a uniform national framework, without each state imposing its own overlay.

The suit lands as federal appeals courts in Connecticut, Nevada and New York have each left their respective states free to enforce gambling laws against sports event contracts, narrowing the preemption argument Kalshi has pressed in multiple jurisdictions. McMahon's ruling in New York, which found Novig's contracts did not qualify as swaps under the Commodity Exchange Act, is the most recent signal that federal courts are not prepared to read CEA preemption as broadly as the exchanges require.