Arizona on Tuesday became the first state to file criminal charges against Kalshi, accusing the prediction market company of operating an illegal gambling business within its borders, a significant escalation in the fight to regulate the popular platform.
The 20-count charging document accuses Kalshi of accepting bets on political outcomes, college sporting competitions and individual player performance in violation of Arizona's gambling laws. The state prohibits operating an unlicensed wagering business and bans betting on elections.
“Arizona will not be bullied into letting any company place itself above state law,” said Democratic Attorney General Kris Mayes.
The criminal case marks a new front in a high-stakes legal battle over whether prediction markets should be subject to the same rules as gambling companies.
President Donald Trump’s administration has thrown its support behind the multibillion-dollar prediction market industry, further amplifying a state-versus-federal fight for regulatory control. The outcome could have sweeping implications for how sports betting — which makes up roughly 90% of Kalshi’s trading volume — is regulated in the U.S.
Kalshi insists it’s a financial marketplace rather than a gambling operation and should only have to answer to federal regulators with the Commodity Futures Trading Commission. The agency under Trump agrees it has exclusive oversight.
Trump’s eldest son, Donald Trump Jr., is a strategic adviser for Kalshi. And the Republican president’s social media platform, Truth Social, is launching its own cryptocurrency-based prediction market called Truth Predict.
Elisabeth Diana, a spokesperson for Kalshi, dismissed the Arizona charges as “meritless” and accused the state of trying to circumvent federal court.
Kalshi sued Arizona, Utah and Iowa in attempts to stop anticipated state action against the platform.
But U.S. District Judge Michael Liburdi in Arizona, a Trump appointee, denied Kalshi's request for a temporary block Tuesday and ordered the company to demonstrate why the case should be in federal court given the new state charges.
At least nine other states have taken some form of legal action against Kalshi, and Utah’s Republican governor has pledged to sign a bill that could undercut the company's business in the state.
So far, the outcomes have been mixed. Federal and state judges in Nevada and Massachusetts, respectively, issued early rulings in favor of states looking to ban Kalshi and its competitor Polymarket from offering sports betting in their states, while federal judges in New Jersey and Tennessee have ruled in favor of Kalshi. The Nevada lawsuit was remanded to state court.
CFTC chairman Michael Selig said the legal fight between Arizona and Kalshi is a jurisdictional issue and is “entirely inappropriate as a criminal prosecution.”
The state argues Kalshi is a gambling operation that brands itself as a marketplace. But the company says its product is different because customers engage in “swaps” between one another instead of betting against the “house.”
Kalshi operates by allowing customers to buy and sell “Yes” or “No” contracts tied to the probable outcome of an event. Anyone with a smartphone can wager on everything from whether it will snow in Miami to whether Trump will say a certain buzzword in a speech. Contracts are typically priced between 1 cent and 99 cents, which roughly translates to the percentage of customers who believe that event will happen.
The charges in Arizona were filed just days before the start of the NCAA men’s and women’s basketball tournaments, one of the busiest periods of the year for prediction markets and sportsbooks.
Kalshi announced a $1 billion perfect bracket challenge on Monday without mentioning the NCAA or March Madness, a pair of NCAA trademarks.
An NCAA spokesperson, Saquandra Heath, said Tuesday the organization remains concerned about “unprotected prediction markets that pose a threat to competition integrity and student-athlete safety.”
Associated Press sports writer Jay Cohen in Chicago contributed to this report.
FILE - Arizona Attorney General Kris Mayes speaks at the Arizona State Prison, March 19, 2025, in Florence, Ariz. (AP Photo/Darryl Webb, File)
NEW YORK (AP) — Donald Trump was booed loudly by fans inside Madison Square Garden when he was shown on video screens during the national anthem prior to Game 3 of the NBA Finals on Monday night.
Trump was shown for several seconds giving a military salute. The boos ended when the U.S. flag followed him on the screens, and fans cheered when New York Knicks players were shown. Mentions of the San Antonio Spurs also elicited loud boos.
Trump is watching from Knicks owner James Dolan’s suite, along with granddaughter Kai, personal adviser Boris Epshteyn and Cabinet secretaries Lee Zeldin, Sean Duffy and Doug Burgum. He is the first sitting president to attend an NBA Finals game.
Trump’s Marine One helicopter flew from his home in New Jersey and landed near Wall Street before his motorcade made its way up through Manhattan and to the arena roughly an hour before tipoff. He encountered a handful of people making rude gestures, and outside the area, one group held signs saying “Trump must go.”
He settled into Dolan's suite shortly afterward.
During the afternoon before Trump's arrival, the New York Police Department and the U.S. Secret Service set up a large perimeter surrounding Madison Square Garden. Fans lined up to get inside the arena more than four hours before tipoff, in a scene more closely resembling New Year’s Eve in Times Square than the usual leadup to a basketball game.
They were required to provide a ticket or pass to get past various checkpoints, along with going through a Transportation Security Administration-style magnetometer. Secret Service personnel and police were positioned at every corner and in large numbers. Daily commuters, tourists visiting Manhattan and fans were all confounded at various times as they tried to maneuver the security.
After traveling from his new home in Florida for the game, Knicks fan Greg Weldon said the main inconvenience faced so far has been the lack of information.
“We’ve asked so many cops, secret service, guys with machine guns, what to do, where should we go,” he said. “Nobody knows.”
Knicks coach Mike Brown and Spurs counterpart Mitch Johnson downplayed any concept of being inconvenienced by the closures and enhanced security because of Trump.
“There’s a lot going on, and I’d much rather be a part of it than not,” Johnson said.
With security stepped up, a watch party outside was canceled, and ticket-holders were not allowed to bring bags inside the Garden. Fans had gathered near the arena to watch games during this playoff run, during which the Knicks have won 13 games in a row to reach the final for the first time since 1999 and move two victories from their first NBA title since 1973.
“We are looking forward to bringing back watch parties for Game 4,” Police Commissioner Jessica Tisch said at a news conference Monday. "But I think New Yorkers are used to presidents coming to town, and they understand that that generally means lockdowns of areas and that’s what you’re going to see tonight at the Garden.”
This is the latest major sporting event Trump has attended during his time as president, and the security measures have created major hassles for fans.
Thousands of fans missed the start of last year’s U.S. Open men’s singles final between Carlos Alcaraz and Jannik Sinner because of lengthy security lines. Even though the U.S. Tennis Association pushed back the start of the match by a half-hour, many fans still couldn’t get in because added measures meant that they had to go through screening not only when they arrived at the Billie Jean King National Tennis Center but again in front of the steps into Arthur Ashe Stadium, where Trump watched from a suite.
Federal law enforcement officials have been reexamining Trump’s security in light of three incidents in the past two years: a shooting at a 2024 rally in Butler, Pennsylvania; the discovery of a man armed with a rifle as Trump played golf in West Palm Beach, Florida, later that year; and the recent shooting at the White House Correspondents’ Association dinner.
Asked Sunday his thoughts on Trump attending, Knicks center Mitchell Robinson said: “Cool, I guess. We can still get out there and play (no matter) who’s here and who’s not.”
Mayor Zohran Mamdani and other dignitaries were also at the game.
It was already hard enough for Knicks fans to get inside Madison Square Garden because of astronomical ticket prices. The get-in price for a ticket is higher than the average cost of monthly rent in New York, surging over $5,000. The best seats are tens of thousands of dollars. Mamdani said he bought his ticket, which he said was standing-room-only, for about $1,000 directly from Madison Square Garden.
The difficulty of seeing the game in-person has prompted fans to crowd bars, streets and watch parties all over the city. The watch party near the Garden has become a major event all through the playoffs, but with Trump attending, that event was moved a few blocks away outside the security perimeter, at Bryant Park.
“We improvise,” said Knicks guard Jose Alvarado, who is a New York native. "We're New Yorkers. We’re going to find a way to watch a game, and that’s what we’re doing.”
AP Basketball Writer Brian Mahoney contributed to this report.
AP NBA: https://apnews.com/hub/NBA
U.S. Secret Service agents and a U.S. Marine brace against the downdraft as a support helicopter lands before Marine One with President Donald Trump aboard, at the Downtown Manhattan Heliport at Pier 6 in New York, Monday, June 8, 2026. (AP Photo/Mark Schiefelbein)
President Donald Trump gestures during the National Anthem as he attends an NBA Finals playoff basketball game between the New York Knicks and the San Antonio Spurs at Madison Square Garden in New York, Monday, June 8, 2026, with Kai Trump, left. (AP Photo/Mark Schiefelbein)
President Donald Trump gestures during the National Anthem as he attends an NBA Finals playoff basketball game between the New York Knicks and the San Antonio Spurs at Madison Square Garden in New York, Monday, June 8, 2026, with Kai Trump, left, Knicks owner James Dolan and Interior Secretary Doug Burgum, right. (AP Photo/Mark Schiefelbein)
NYPD officers escort the motorcade of President Donald Trump outside of Madison Square Garden ahead of Game 3 of the NBA Finals basketball series, Monday, June 8, 2026, in New York. (AP Photo/Ryan Murphy)
New York Knicks fans wait in line to enter Madison Square Garden ahead of Game 3 of the NBA Finals, Monday, June 8, 2026, in New York. (AP Photo/Ryan Murphy)
Madison Square Garden ahead of Game 3 of the NBA Finals, Monday, June 8, 2026, in New York. (AP Photo/Ryan Murphy)
Secret Service agents stand guard in front of Madison Square Garden ahead of Game 3 of the NBA Finals, Monday, June 8, 2026, in New York. (AP Photo/Ryan Murphy)
The motorcade of President Donald Trump arrives to Madison Square Garden ahead of Game 3 of the NBA Finals basketball series, Monday, June 8, 2026, in New York. (AP Photo/Ryan Murphy)
A Secret Service agent stands watch outside Madison Square Garden in New York, Monday, June 8, 2026, as President Donald Trump is set to attend Game 3 of the NBA Finals basketball series between the New York Knicks and the San Antonio Spurs. (AP Photo/Ted Shaffrey)
Security fencing is set up outside of Madison Square Garden in New York, Monday, June 8, 2026, as President Donald Trump is set to attend Game 3 of the NBA Finals basketball series between the New York Knicks and the San Antonio Spurs. (AP Photo/Ted Shaffrey)
Security is set up outside of Madison Square Garden in New York, Monday, June 8, 2026, as President Donald Trump is set to attend Game 3 of the NBA Finals basketball series between the New York Knicks and the San Antonio Spurs. (AP Photo/Ted Shaffrey)
FILE - President Donald Trump, center, attends the men's singles final at the U.S. Open tennis tournament, Sept. 7, 2025, in New York. (AP Photo/Manuel Balce Ceneta, File)
A traveler tries to navigate the area as stringent security measures are set up outside of Madison Square Garden in New York, Monday, June 8, 2026, as President Donald Trump is set to attend Game 3 of the NBA Finals basketball series between the New York Knicks and the San Antonio Spurs. (AP Photo/Ted Shaffrey)
FILE - Donald Trump, right, talks to an unidentified man from the stands at Madison Square Garden during the New York Knicks game against the Dallas Mavericks on Jan. 11, 2006, in New York. (AP Photo/Kathy Willens, File)
President Donald Trump speaks at Custer Farms in Chippewa Falls, Wis., Friday, June 5, 2026. (AP Photo/Glen Stubbe)
