Are prediction-market platforms like Kalshi (where you bet on election outcomes, sports outcomes, and other future events) legal in Arkansas without a gaming license?

Plain-English summary

Senator Bryan King described a prediction-market company like Kalshi that lets people bet on future events, including elections, disasters, sports, and awards. He asked whether the company could operate without an Arkansas gaming license and whether sports event contracts would be taxed as paid fantasy sports games.

The Attorney General answered the licensing question yes, based on the model King described: a company operating that way would be engaged in gambling or gaming and would require licensure. The opinion applies the Arkansas Supreme Court's definition of gambling to the described activity of risking money on whether a future event occurs. It says calling the activity a prediction market does not avoid scrutiny under the gambling laws. The AG also said that, to the extent a company like Kalshi facilitates sports wagers or transmits information for gaming purposes as the request suggested, those actions violate Arkansas law.

The AG answered the fantasy sports tax question no for the described model. A qualifying paid fantasy sports game must satisfy requirements concerning advance notice of prizes and the use of accumulated statistics from individual athletes, among others. The AG found that the described model did not meet those requirements. It would therefore neither pay that tax nor receive the paid fantasy sports exemption. The other two questions assumed that the company could operate without a gaming license; the AG called them moot after answering the first question.

What this means for you

If you operate a prediction market

The opinion addresses the model presented in Senator King's request. Compare your actual contracts and operations with that description before relying on its conclusion. The AG found that the described model needed gaming licensure; he did not identify a licensing process for a specific company.

If you operate a fantasy sports game

The tax and exemption discussed in the opinion depend on meeting the statutory definition of a paid fantasy sports game. The opinion identifies advance notice of prizes and athlete statistics as key requirements and says the described event contracts fail them. It does not assess a different operator's game.

If you research Arkansas gaming regulation

The opinion answers four questions as framed by the senator. It leaves the proposed questions about regulation as a financial exchange and about categories of otherwise permitted event contracts unanswered because its licensing answer made their premises inapplicable.

Common questions

Q: Did the AG decide every Kalshi contract is illegal?
A: The opinion assesses the business model described in the request. Its answer on gaming licensure is expressly based on that description.

Q: Why did the AG treat that model as gambling?
A: The AG said a participant risks money on whether a future event occurs, fitting the gambling definition used by the Arkansas Supreme Court. It also said renaming the activity a prediction market does not shield it from scrutiny.

Q: Do sports event contracts pay Arkansas's fantasy sports tax?
A: Only contracts that meet the definition of a paid fantasy sports game do. The AG concluded that the model described to him did not meet the requirements and thus did not owe that tax or receive the related exemption.

Q: Did the opinion decide which event contracts could be traded without a gaming license?
A: No. The AG treated that question as moot because he concluded that the described business model required licensure.

Background and statutory framework

The opinion says gambling and gaming are generally prohibited in Arkansas and that courts construe the prohibitions liberally to prevent evasion through new names or devices. It applies those principles to the senator's description of event contracts. For sports-related activity, it additionally addresses receiving or transmitting information concerning sports or games for gaming purposes.

Paid fantasy sports games receive a statutory exception only when the operator pays the applicable tax and meets the statutory conditions. The opinion highlights the timing and disclosure of prizes, outcomes based predominantly on accumulated individual-athlete statistics, and limits on outcomes tied to a single team or a single athlete's performance. It finds that the described prediction-market model does not qualify.

Citations

• A.C.A. § 23-116-102, the paid fantasy sports definition expressly discussed in the opinion.
• A.C.A. § 23-116-101, the exemption expressly discussed in the opinion.

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

BOB R. BROOKS JR. JUSTICE BUILDING
101 WEST CAPITOL AVENUE
LITTLE ROCK, ARKANSAS 72201
Opinion No. 2025-073
October 23, 2025
The Honorable Bryan B. King
State Senator
871 County Road 814
Green Forest, Arkansas 72638

Dear Senator King:

You have requested an opinion from this Office concerning prediction markets and event contracts. In making your request, you note that Kalshi, "one of the largest exchange platforms for predictive markets," allows people to "bet on future events" like "election outcomes, the occurrence of natural disasters, sports outcomes, and who will win the Nobel Peace Prize this year."

In that light, you ask the following four questions:

1. Would a company like Kalshi be operating in violation of Arkansas law if it was not licensed to engage in gaming operations?

Brief response: Yes, based on the information provided in the opinion request, a business model like you have described constitutes gambling or gaming and requires licensure.

2. Under Arkansas law, would sports related event contracts be subject to Arkansas's tax on fantasy sports games?

Brief response: No, unless the contracts meet the definition of a "paid fantasy sports game" under A.C.A. § 23-116-102, they are not subject to such a tax. Only games that meet this definition pay the tax and benefit from the exemption under A.C.A. § 23-116-101.

3. If companies like Kalshi are not required to possess gaming licenses, would they be subject to any other Arkansas regulatory body as a financial exchange?

Brief response: My response to Question 1 renders this question moot.

4. If companies like Kalshi can operate under Arkansas law without a gaming license, is there any type of event contract that could not be exchanged under Arkansas law, such as election contracts or contracts related to future tragedies?

Brief response: My response to Question 1 renders this question moot.

DISCUSSION

Question 1: Would a company like Kalshi be operating in violation of Arkansas law if it was not licensed to engage in gaming operations?

To answer your question, one must first determine whether a company like Kalshi facilitates or offers "gambling" or "gaming." Although neither word is defined by statute, the Arkansas Supreme Court uses these words interchangeably and has defined them as "the risking of money between two or more persons, on a contest or chance of any kind, where one must be loser and the other gainer."

Generally, gambling and gaming are prohibited in Arkansas. Regulating or prohibiting such activities falls "within the police powers of a state." When interpreting statutes that prohibit gambling or gaming, judges will read "the statutes liberally" and "in favor of the prohibition," to prevent someone "from evading the penalty of the law" by changing the name or creating a new name or device.

The acts you describe meet the Supreme Court's definition of gambling and gaming: a participant is risking money on a chance that some future event occurs. The fact that a company has rebranded this gambling activity as a "prediction market" does not protect it from scrutiny. Further, it is unlawful for anyone to "receive or transmit information" concerning sports or games "for the purpose of gaming." Thus, to the extent that a company like Kalshi facilitates wagers on sports outcomes or transmits data for gaming purposes (and your correspondence suggests that it does), those actions violate the law as well.

Question 2: Under Arkansas law, would sports related event contracts be subject to Arkansas's tax on fantasy sports games?

Arkansas law permits the online operation of "paid fantasy sports games," which are expressly exempt from the state's gambling and gaming prohibitions. To qualify for this exemption, the operator of such games must pay a tax and meet multiple other requirements. For purposes of this opinion, the most relevant requirements are:

• The value of "all prizes and awards offered to winning game participants" must be "established and made known" in advance of the game.
• The winning outcomes must be determined "predominantly by accumulated statistical results of the performance of individual athletes."
• A winning outcome cannot be "based on the score, point spread, or performance or performance of any single team or combination of teams on any single performance of an individual athlete."

Because the business model as you have described does not meet the above requirements, it would not fall under the statutes governing "paid fantasy sports games." Consequently, it would not be subject to Arkansas's tax on fantasy sports and would not benefit from A.C.A. § 23-116-101(b)'s exemption from certain state gambling laws.

Question 3: If companies like Kalshi are not required to possess gaming licenses, would they be subject to any other Arkansas regulatory body as a financial exchange?

My response to Question 1 renders this question moot.

Question 4: If companies like Kalshi can operate under Arkansas law without a gaming license, is there any type of event contract that could not be exchanged under Arkansas law, such as election contracts or contracts related to future tragedies?

My response to Question 1 renders this question moot.

Assistant Attorney General William R. Olson prepared this opinion, which I hereby approve.

Sincerely,
TIM GRIFFIN
Attorney General