On May 21, 2025, the Arizona Department of Gaming (ADG) sent cease-and-desist letters to Kalshi, Robinhood, and Crypto.com, alleging that their prediction market platforms facilitate unlicensed sports betting in violation of state gambling laws. This regulatory action underscores the ongoing tension between state authorities and federally regulated financial platforms offering sports and cryptocurrency-related contracts.

Allegations of Unlicensed Sports Betting

The ADG claims that the sports event contracts offered by Kalshi, Robinhood, and Crypto.com constitute sports betting, which requires a state-issued license under Arizona law. The letters demand that these companies immediately halt such operations or face potential criminal or civil penalties. This move follows similar regulatory challenges in six other states—Nevada, New Jersey, Maryland, Ohio, Illinois, and Montana — where Kalshi, in particular, has faced scrutiny for its prediction market activities.

Kalshi’s Defense and Regulatory Context

Kalshi, regulated by the Commodity Futures Trading Commission (CFTC), argues that its prediction market contracts are legal financial instruments, not gambling activities. The platform asserts that its operations fall under federal oversight, creating a conflict with state-level gambling regulations. Robinhood and Crypto.com, which also offer crypto-related prediction markets, face similar accusations, highlighting the broader regulatory ambiguity surrounding platforms that blend sports betting, cryptocurrency trading, and financial derivatives.

This case reflects a growing debate over the classification of prediction markets, as states seek to protect their gambling oversight while companies leverage federal regulations to offer innovative financial products.

Source: https://casino.guru/news/gambling-industry/kalshi–robinhood-and-crypto-com-receive-cease-and-desist-letters-in-arizona-7490