QALSI MARKET “Will Iran effectively close the Strait of Hormuz for more than 7 days?” This photo illustration taken in Chania, Greece on March 9, 2026 shows the Qarsi logo displayed on a smartphone screen and a laptop computer screen in the background.
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The Arizona Attorney General’s Office has filed misdemeanor criminal charges against Mr. Carsi, accusing the betting platform of operating an illegal gambling and election gambling operation in the state.
Although this is the first time criminal charges have been filed against Carsi, the company has been embroiled in multiple lawsuits and investigations, and has received dozens of cease-and-desist letters across the United States.
Prediction platforms like Kalshi have been compared to online sports gambling because they allow users to bet on the outcome of events in pop culture, politics, sports, and more.
Several states argue that legalizing and regulating sports betting falls under the jurisdiction of local regulators and is outside the purview of the Commodity Futures Trading Commission, which regulates event contracts and prediction markets.
States such as Michigan and Massachusetts have filed civil lawsuits aimed at forcing Karshi to shut down operations and meet gambling licensing requirements.
In the Arizona case, Attorney General Chris Mays charged Calci with 20 counts of accepting various types of wagers in Arizona without a license, including betting on state elections, which are separately and expressly prohibited by Arizona law.
“No company can decide for itself which laws to follow,” Mays said in a statement.
Calci distinguishes between the event contracts it offers and those offered by sportsbooks and casinos.
“Unfortunately, states may pursue criminal charges based on flimsy arguments on paper,” the company said in a statement to CNBC. “States like Arizona want to independently regulate national financial exchanges and are willing to do whatever it takes to do so. As other courts have recognized and the CFTC has acknowledged, Calci is subject to federal jurisdiction.”
Last week, Carsi filed for a preliminary injunction to prevent Arizona from enforcing the state law.
On Tuesday, federal Judge Michael Liburdi denied Mr. Carsi’s request for a temporary restraining order and ordered him to establish why the case should be tried in federal court, given the state’s charges against Mr. Carsi.
Mr. Carsi has pre-emptively filed lawsuits to prevent other states from taking punitive action, a strategy Mr. Mays described as bullying states “rushing to federal court to avoid accountability.”
Gaming lawyer Daniel Wallach is closely following lawsuits and counterclaims against prediction platforms. He described preemptive litigation as a Karshi modus operandi.
“The ‘race to court’ strategy has so far proven to be an effective tactic,” Wallach said, citing legal victories for Kalsi in obtaining preliminary injunctions in New Jersey and Tennessee.
Mr. Wallach is not involved in Mr. Kalsi’s legal dispute.
Still, the Arizona Attorney General’s Office highlighted Mr. Carsi’s recent loss in a preliminary injunction suit against the state of Ohio, with federal judge Sarah Morrison saying Mr. Carsi’s concerns were “tweeted by Ohio’s interest in exercising police powers to promote the public welfare, enforcing duly enacted laws, and regulating sports gambling.”
CFTC Chairman Michael Selig recently told CNBC that the agency will require prediction platforms that currently self-certify to better restrict event contracts that encourage manipulation, such as whether a player will get injured.
A bipartisan bill has been introduced in the House of Representatives that would ban sports-related event contracts unless the state specifically authorizes them. The bill would also completely ban prediction markets about elections and government actions.
As lawmakers, regulators and courts struggle to define what gambling is, 61% of Americans report that they believe event contracts in prediction markets are more like gambling than investing, according to a poll released Tuesday by Ipsos and the American Association for Boys and Men.
Disclosure: CNBC and Kalsi have a commercial relationship that includes a minority investment in CNBC.
