The Department of Justice (DOJ) and the CFTC filed suit against the state of Arkansas to stop it from enforcing against Kalshi, after Attorney General Tim Griffin sued the prediction market on Nov. 4 for running an illegal gambling operation. The dispute pits federal authority over event contracts against state gambling laws.
What Arkansas is seeking
Griffin sued KalshiEX LLC and Kalshi Inc., the owners of Kalshi, for multiple violations of the Arkansas Deceptive Trade Practices Act, the state's consumer protection law. The state is asking for restitution, penalties, taxes and injunctive relief.
"It doesn't take a genius to understand that wagering money on whether the Razorbacks win or lose is gambling," Griffin said. "Arkansas law is concerned with substance, not semantics."
The state's arguments
- Kalshi built a global business it calls a prediction market and lets users wager on just about anything: elections, reality competition shows, football games
- The platform was open to Arkansas consumers, including individuals as young as 18, and encouraged them to wager real money on sporting and entertainment events
- Kalshi did not obtain licenses, submit to oversight, comply with restrictions or pay the taxes required of lawful gambling operators
- It offers self-exclusion tools, deposit limits and trading breaks, features typically associated with gambling operators
- It promotes gambling addiction resources, including its own partnership with the National Council for Problem Gambling
Griffin argues Kalshi is not blind to the real risks its platform carries for users, "including excessive wagering, financial losses, depression, and other mental health harms". Kalshi maintains its products are not gambling, but according to Griffin "its actions speak louder than its labels".
The federal response
The DOJ and CFTC stepped in on Kalshi's side, asking the court to stop Arkansas from enforcing against the platform. The state's position is that Kalshi is an unregulated platform and that gambling on an unregulated platform is squarely prohibited under Arkansas law.
Lawsuit | Plaintiff | Defendant | Relief sought |
|---|---|---|---|
Nov. 4 | Arkansas (AG Tim Griffin) | KalshiEX LLC, Kalshi Inc. | restitution, penalties, taxes, injunction |
Federal action | DOJ and CFTC | State of Arkansas | block enforcement against Kalshi |
What it means for you
If you trade on Kalshi from Arkansas, the state is seeking restitution, penalties and taxes from the company plus an injunction on its activity, and the federal lawsuit aims to block those measures.
The state's case covers wagers on elections and Razorbacks games alike, and Griffin explicitly cited access for 18-year-old users as one of the grounds for the action.
