Kris Mayes Wants to Make a Federally Licensed Exchange a Crime. Arizonans Should Tell Her No.
The Ninth Circuit just handed Arizona's attorney general the opening she has wanted since March. Here is what she is actually asking for — and how to tell her office what you think of it.
September 2, 2026 at 3:40 PM EDT
8 min read
Editor's note: this is a commentary piece and argues a position. TrueEdge Wire's parent company builds odds and market-comparison tools that cover prediction markets alongside licensed sportsbooks, and this site earns commissions from some operators. We think you should know that before you read our opinion of a prosecutor. The reporting underneath it is sourced and linked.
On March 17, Arizona Attorney General Kris Mayes did something no state prosecutor in the United States had ever done. She filed a criminal information — twenty counts — against KalshiEx LLC and Kalshi Trading LLC, a pair of entities registered with and supervised by the Commodity Futures Trading Commission. Four of those counts were for election wagering. The rest covered what her office called an unlicensed wagering business: contracts on professional and college sports, contracts on individual player performance, and, memorably, a contract on whether Elon Musk would show up at the Super Bowl.
"Kalshi may brand itself as a 'prediction market,'" Mayes said, "but what it's actually doing is run an illegal gambling operation." She added that "Arizona will not be bullied into letting any company place itself above state law."
Last Friday the Ninth Circuit gave her the legal footing she had been missing. In a case brought by Nevada, a three-judge panel held that sports event contracts are not "swaps" under the Commodity Exchange Act, and therefore are not shielded from state gambling law. That reasoning is the exact opposite of the reasoning Judge Michael Liburdi used in April when he enjoined Mayes from prosecuting Kalshi. Her injunction is now living on borrowed time, and her office has said it is reviewing the ruling.
She may well win. We think she is wrong anyway, and we think Arizonans have about three weeks to say so before this becomes settled practice rather than an open question.
The consumer-protection argument does not survive contact with Arizona's own statute book
Read the March press release and you would think Arizona had been keeping sports wagering out of the state. It has not. Arizona legalized and licensed sports betting in 2021. You can open FanDuel in Phoenix this afternoon and bet an NFL first-quarter total. You can bet a player's rushing yards, a same-game parlay, a live line that moves every twenty seconds. Every one of those products is legal, taxed, advertised on the side of a light-rail train, and sold by companies that hold Arizona licenses.
So the state's objection is not that Arizonans are trading on football. It is that these particular Arizonans are trading on football somewhere the state does not collect, does not license, and does not control. That is a real governmental interest. It is not a moral one, and it should not be dressed as one.
The distinction matters because it changes what the remedy should be. If the problem is that a federally regulated exchange is operating outside Arizona's licensing regime, the ordinary tools are a civil suit, a regulatory referral to the CFTC, a negotiated licensing framework, or a bill in the legislature. Twenty criminal counts against a CFTC registrant is not the ordinary tool. It is the loudest available one.
Her own federal counterpart sued her to stop it
Two weeks after the charges, on April 2, the Commodity Futures Trading Commission filed suit in federal court against Arizona officials seeking a declaration and an injunction. The agency that licenses, examines and supervises Kalshi went to court to stop a state attorney general from criminally prosecuting its registrant for offering the products it supervises.
That is not a technicality. It is the federal government telling Arizona, in a filing, that it has this covered. And it is not as though the CFTC has been passive: on June 10 the Commission proposed a full rulemaking on event contracts and public-interest determinations, with a comment period that ran through July 27. There is a live, public, federal process for deciding exactly which event contracts should be permitted and on what terms. Mayes is not waiting for it.
Criminal liability should not depend on which circuit you are standing in
In April, the Third Circuit granted Kalshi an injunction against New Jersey regulators on a broader reading of federal preemption. In August, the Ninth Circuit went the other way. Two federal appellate courts have now looked at the same statute and the same product and reached opposite conclusions. CNBC, Sportico and most of the practising bar expect the Supreme Court to take it.
Which means that today, the identical trade — same contract, same exchange, same clearing — is federally protected conduct in Trenton and chargeable conduct in Phoenix. Reasonable people can disagree about which court read the statute correctly. Almost nobody should be comfortable with a prosecutor resolving that disagreement by charging first and letting the Supreme Court sort it out in eighteen months.
The Ninth Circuit's own opinion is more careful than the headline suggests. The panel worried that Kalshi's broad reading of "swap" had "no limiting principle" and would raise major-questions problems — that Congress does not hide the power to "upend its decades of careful regulation of gambling" inside "broad definitions of the words used in a Wall Street Reform Bill." That is a serious argument, and it deserves a serious answer rather than a reflex. But Judge Kenneth K. Lee wrote separately to note that the Act's special-rule provision could still let some event contracts qualify, particularly if the CFTC's proposed public-interest framework takes effect. Even the court that ruled against Kalshi left the door open. Mayes is trying to nail it shut in a state where twenty-seven of her fellow attorneys general have not.
The election-contract counts are the ones to watch
Four of the twenty counts concern election markets: the 2028 presidential race, the 2026 Arizona governor's race, the Republican gubernatorial primary, the secretary of state race. These are the counts most likely to survive, and they are the ones with the least to do with sports.
We will be honest about where our own confidence runs out. There is a defensible case for treating markets on the outcome of the very elections a state administers differently from markets on the Rose Bowl. Arizona's secretary of state runs its elections; a market on who wins that office sits closer to the machinery of government than a market on Alexander Zverev's serve percentage. If Mayes wants to draw a line there and defend it, that is an argument worth having.
But that is not the case she filed. She filed sixteen other counts alongside it, and her public framing has been about gambling generally, not about election integrity specifically. If the election contracts are the real concern, the sports counts are leverage. Arizonans should notice which one is doing the work.
Who is actually paying for this fight
Prediction markets have spent heavily to defend themselves — Kalshi's lobbying ran roughly $990,000 in-house in the first half of 2026 and close to $1.8 million counting outside firms, and it seeded an advocacy group, Americans for Fair Markets, in August. That is a lot of money and it should be said plainly.
It is also less than the other side. The casino and commercial-sportsbook lobby has been in this fight longer, with more members, and with something the exchanges do not have: existing state licenses and existing state revenue-sharing arrangements that a competing venue erodes. In Arizona specifically, sports wagering sits inside a negotiated tribal gaming framework. When a new venue takes handle outside that framework, the parties to it have a direct and legitimate financial interest in stopping it — and a lot of practice at asking an attorney general for help.
None of that makes Mayes bought. It does mean that "protecting consumers" and "protecting incumbent licensees" point in exactly the same direction here, and that when those two things line up perfectly, the public is entitled to ask which one is steering.
What to actually do about it
Here is the part where a lot of sites would hand you a petition link and move on. We are going to tell you the truth instead, because a dead link is worse than no link.
Kalshi does run a public advocacy hub at act.kalshi.com. It is real, and it is where the company has run its regulatory comment campaigns — including one that killed a Minnesota prediction-market ban and several aimed at the CFTC rulemaking. As of today, every campaign listed there is closed, and there is no Arizona campaign. If the Liburdi injunction dissolves, that is the first place a new one will appear, and it is worth bookmarking. But we are not going to tell you it currently sends a message to Kris Mayes, because it does not.
The channel that actually reaches her office is her office. The Arizona Attorney General's Office takes public contact at azag.gov/contact-us, and its Phoenix line is (602) 542-5025. The office is at 2005 N. Central Ave., Phoenix, AZ 85004. Correspondence to a state AG about a pending prosecution is ordinary civic participation; it is logged, and volume on an issue is something every AG's office tracks.
If you write, be specific and be brief. The three points that land are the ones her office has not answered publicly: that Arizona already licenses the same wagers she is prosecuting; that the CFTC has sued the state to stop her; and that she is charging crimes over a question two federal circuits cannot agree on. You are a constituent describing a legal product you use. That is a stronger message than an insult, and it is harder to file away.
If you are not in Arizona, this still reaches you — the Ninth Circuit covers nine states, and Utah and Washington have already moved. Americans for Fair Markets is at americansforfairmarkets.com and is the industry's organizing vehicle. It is Kalshi-funded, which you should factor in, exactly as you should factor in that the loudest voices on the other side are funded by casinos.
The part we would say even if it cost us
Prediction markets are not owed a win. The Ninth Circuit's textual argument is strong, the addiction and consumer-protection concerns raised by state regulators are not manufactured, and an exchange that offers 24/7 sports trading with no state-level responsible-gaming rules attached is asking for the scrutiny it is getting. If the answer turns out to be a federal framework with real consumer protections bolted on — the thing the CFTC proposed in June — that would be a better outcome than the status quo, and we would say so.
What Arizona is doing is not that. It is a criminal prosecution filed ahead of a rulemaking, against a federally licensed venue, over a legal question the courts have openly split on, in a state that already sells the same product through companies it happens to license. Whatever you think of trading contracts on football, that ordering should bother you.
Tell her.