Traders flocked to prediction markets—now a criminal case is testing the model

Kalshi made headlines last month over allowing people to place wagers on the Iran war. Now the prediction market platform is being sued by the state of Arizona, the first state to file criminal charges against the controversial company.  The platform, which allows users to place wagers on happenings, such as sports games or even current events, is being accused of operating an illegal gambling business that violates the state’s laws. In a 20-count document, prosecutors alleged that the platform is mischaracterizing itself to avoid being subject to gambling laws, and is improperly allowing bets on political races. “Kalshi may brand itself as a ‘prediction market,’ but what it’s actually doing is running an illegal gambling operation and taking bets on Arizona elections, both of which violate Arizona law,” state Attorney General Kristin Mayes said in a statement. “No company gets to decide for itself which laws to follow.” While Kalshi, which is overseen by the Com