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 King asked whether platforms like Kalshi, "one of the largest exchange platforms for predictive markets," can operate in Arkansas without a gaming license. Kalshi-style platforms let users buy and sell contracts that pay out based on future events: who wins an election, whether a hurricane reaches Florida, who wins the Nobel Peace Prize, the outcome of an NFL game.
The AG's answer to the four questions:
- Yes, Kalshi-style platforms violate Arkansas gambling law absent a gaming license. The Arkansas Supreme Court has defined gambling and gaming 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." Sharp v. State, 350 Ark. 529 (2002), quoting Portis v. State, 27 Ark. 360 (1872). The user is risking money on a contest or chance. Whether the platform calls it a "prediction market," an "event contract," or anything else does not change the substance.
The AG also flags A.C.A. § 5-66-114(a), which makes it unlawful to "receive or transmit information" concerning sports or games "for the purpose of gaming." So a platform that facilitates wagers on sports outcomes (and Senator King's correspondence indicates Kalshi does) violates that section as well.
- No, Kalshi-style sports event contracts are not subject to the fantasy-sports tax. Arkansas's "paid fantasy sports games" statute (A.C.A. § 23-116-101 et seq.) carves out a narrow exemption from gambling prohibitions and imposes a tax. To qualify, an operator must meet several requirements, including:
- Prizes and awards are established and known in advance.
- Winning outcomes are determined "predominantly by accumulated statistical results of the performance of individual athletes."
- Winning outcomes cannot be "based on the score, point spread, or performance" of any single team or any single performance of an individual athlete.
Kalshi-style event contracts, which often pay out on a single team's win or a single athlete's performance, fail those tests. They do not qualify for the fantasy-sports exemption and are not subject to (or protected by) the fantasy-sports tax.
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Question 3 (Other regulatory bodies if not gaming) is moot because the answer to Question 1 is yes (gaming licensure required).
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Question 4 (Which event contracts are excluded under Arkansas law) is moot for the same reason.
The "rebranding does not change the law" point. A.C.A. § 5-66-101 directs courts to read gambling statutes "liberally" and "in favor of the prohibition" to prevent evasion "by changing the name or creating a new name or device." The AG cites this as direct support for treating "prediction markets" as gambling.
Federal preemption note. The opinion does not address whether the federal Commodity Futures Trading Commission's (CFTC) jurisdiction over Kalshi-style event contracts under the Commodity Exchange Act preempts Arkansas's gambling law. That federal-law question is outside the scope of an AG opinion.
What this means for you
If you are a Kalshi user in Arkansas
The AG's reading is that placing money on an event contract is illegal gambling under Arkansas law. Risk: the AG's opinion is persuasive, not binding precedent. A court could rule differently, and federal CFTC preemption is a live question that the AG explicitly does not address. But anyone wagering on a prediction-market platform in Arkansas without explicit federal-vs-state preemption clarity is taking on legal exposure.
If you are a prediction-market platform considering Arkansas
You will be operating in defiance of the Arkansas AG's stated reading of the gambling statutes unless you obtain Arkansas gaming licensure or the federal preemption question gets resolved in your favor by a court. Cease-and-desist letters from the AG's office, or referrals to local prosecutors, are reasonably foreseeable.
If you are a sports-data or sports-news operator
A.C.A. § 5-66-114(a) prohibits receiving or transmitting sports information "for the purpose of gaming." Pure news reporting is not the target. Data feeds explicitly licensed to wagering operators in Arkansas raise risk under this section per the AG's reading.
If you are a fantasy-sports operator licensed under § 23-116
Your business model is unaffected by this opinion. The AG carefully distinguishes fantasy sports (which do qualify for the carveout under § 23-116-101 if all requirements are met) from prediction markets and event contracts (which do not). Make sure your offering still satisfies the "predominantly statistical performance of individual athletes" requirement and is not based on a single team's score or a single athlete's single performance.
If you are a legislator considering a prediction-market regulatory framework
The AG's read is that current Arkansas law treats prediction markets as illegal gambling. If the General Assembly wants to permit them under regulation, it would need to pass an explicit exemption or licensure framework similar to § 23-116 for fantasy sports. The federal preemption issue would also benefit from explicit legislative attention.
If you are a compliance officer at a financial services firm
Treat Kalshi-style event contracts as illegal gambling under Arkansas law for purposes of your Arkansas-resident customer flow until the federal preemption issue is resolved. Document the AG opinion in your risk assessment and consider geofencing.
Common questions
What is Kalshi?
A platform that lists "event contracts" tied to future events (elections, sports, weather, awards) and lets users buy and sell positions in those contracts. The CFTC regulates Kalshi at the federal level as a designated contract market.
Why does the AG say it is gambling?
Because the Arkansas Supreme Court's gambling definition (risking money on a contest or chance) captures the activity. The opinion treats "prediction market" framing as a label change that does not affect the substance.
Does the federal CFTC license preempt Arkansas's gambling law?
The AG does not opine. There is active federal litigation on related questions. Until preemption is decided in your favor, the conservative posture is to treat Arkansas gambling law as binding.
Why doesn't fantasy sports licensure cover Kalshi?
Because fantasy sports operate on accumulated statistical results across multiple athletes (think DraftKings or FanDuel season-long contests). A Kalshi event contract on whether the Razorbacks win Saturday's game is based on a single team's score, which the fantasy-sports statute expressly excludes.
What about prediction markets on elections specifically?
Same gambling analysis. The Arkansas Supreme Court's definition does not turn on what the contest is about. Elections, weather events, Nobel Peace Prizes are all "contests or chances of any kind."
Could a prediction-market operator get an Arkansas gaming license?
The opinion says licensure is required but does not identify a specific licensure path that fits prediction markets. Arkansas's existing gaming licenses are designed for casinos, racetracks, charitable bingo, and fantasy sports. A bespoke licensure scheme for prediction markets does not exist in Arkansas law as of this opinion.
Is the AG saying I will be prosecuted?
The AG opinion is a legal analysis, not a prosecution decision. Local prosecutors decide whether to pursue criminal cases. The opinion gives them legal cover if they choose to do so.
Background and statutory framework
A.C.A. §§ 5-66-101 to -120 are the core Arkansas gambling prohibitions. § 5-66-101 directs courts to read these statutes "liberally" and "in favor of the prohibition" to prevent evasion "by changing the name or creating a new name or device."
A.C.A. § 5-66-114(a) prohibits receiving or transmitting information concerning sports or games "for the purpose of gaming."
Sharp v. State, 350 Ark. 529 (2002). The Arkansas Supreme Court's modern definition of gambling/gaming: "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." Sharp adopts the definition from Portis v. State, 27 Ark. 360 (1872).
Ah Sin v. Wittman, 198 U.S. 500 (1905). Regulating or prohibiting gambling falls "within the police powers of a state."
A.C.A. § 23-116-101 et seq. (Paid Fantasy Sports Games). Creates a narrow exemption from gambling laws for fantasy sports games, with three key requirements:
- Prizes and awards established and known in advance.
- Winning outcomes determined predominantly by accumulated statistical results of individual athletes.
- Winning outcomes cannot be based on the score, point spread, performance, or single performance of a team or individual athlete.
A.C.A. § 23-116-104 imposes a tax on paid fantasy sports games.
Other Arkansas gambling-related opinions. The AG cites a long line of prior opinions on related gambling questions (2025-022, 2023-008, 2016-073, 2009-123, 2006-052) reflecting consistent enforcement of the gambling prohibition against rebranded variants.
Citations
Statutes:
- A.C.A. § 5-66-101 (liberal construction in favor of prohibition)
- A.C.A. § 5-66-114 (transmitting sports information for gaming)
- A.C.A. § 23-116-101 (paid fantasy sports exemption)
- A.C.A. § 23-116-102 (paid fantasy sports requirements)
- A.C.A. § 23-116-103 (paid fantasy sports authority)
- A.C.A. § 23-116-104 (paid fantasy sports tax)
Cases:
- Sharp v. State, 350 Ark. 529, 88 S.W.3d 848 (2002)
- Portis v. State, 27 Ark. 360 (1872)
- Ah Sin v. Wittman, 198 U.S. 500 (1905)
Other AG opinions:
- 2025-022, 2023-008, 2016-073, 2009-123, 2006-052 (prior gambling analyses)
Source
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:
- 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.
- 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.
- 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.
- 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