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Prediction markets like Polymarket and Kalshi have hit the headlines\u2014not least because of their role in making some people filthy rich off the back of the Middle Eastern war. But they\u2019ve also drawn the attention of legislators concerned about their growing prominence.<\/p>\n
Many officials have privately raised concerns about platforms like Polymarket and Kalshi. Arizona\u2019s attorney general has gone further, charging Kalshi with offering what the state alleges are illegal bets on election outcomes. \u201cKalshi may brand itself as a \u2018prediction market,\u2019 but what it\u2019s actually doing is running an illegal gambling operation and taking bets on Arizona elections, both of which violate Arizona law,\u201d said Kris Mayes, the state\u2019s attorney general, in a statement<\/a>.<\/p>\n At the same time, Sen. Chris Murphy and Rep. Greg Casar, both Democrats, have introduced the BETS OFF Act<\/a>, which would ban wagering on government actions, terrorism, war, assassination, and events where an individual knows or controls the outcome.<\/p>\n The recent developments are \u201cwild,\u201d says John Holden, associate professor of business law and ethics at the Kelley School of Business at Indiana University. \u201cThis is the most aggressive we have seen a state be with going after any of the prediction market sites.\u201d Gaming law specialist lawyer Daniel Wallach adds that \u201cthis represents a true inflection point.\u201d<\/p>\n For Holden, what stands out is that Arizona is pursuing Kalshi under both general betting laws and specific prohibitions on election wagering. \u201cElection wagering is something that many states prohibit via specific statutes,\u201d he says. That approach could criminalize betting on elections, rather than relying solely on civil enforcement.<\/p>\n \u201cThis is clearly an escalation,\u201d says Karl Lockhart, assistant professor of law at DePaul University. The strategy itself marks a shift. \u201cArizona, and actually a lot of states, have these laws that forbid people from gambling on elections,\u201d says Lockhart. Using those statutes to argue that Kalshi cannot serve customers in the state is a novel attempt to rein in the platform. \u201cArizona is going to be the first to test this, to see if this election betting law approach works,\u201d he says.<\/p>\n