Arkansas sued Kalshi yesterday (Wednesday), accusing the prediction market of running an unlicensed sports-betting business that took wagers from residents as young as 18. Attorney General Tim Griffin is seeking restitution, civil penalties, unpaid taxes and an injunction.The case makes Arkansas the seventh state to charge, sue or restrict Kalshi, according to a CoinDesk tally.Kalshi draws most of that pressure because it holds most of the market. It took 82% of a record $72.3 billion in combined prediction-market volume in September, 16 times the level a year earlier, according to FM Intelligence calculations.London's trading industry is coming home!What Each State Wants From KalshiStates have picked different legal tools against Kalshi, and the remedies they want range from back taxes to criminal convictions.Arizona opened the criminal route in March, when it charged Kalshi with running an illegal gambling business. Utah followed a civil suit filed on October 20 with criminal charges against the company and co-founders Tarek Mansour and Luana Lopes Lara, CoinDesk reported.Others are putting a price on it. New York has asked a state court for at least $36 billion, and Nevada regulators want $120,000 a day over contracts they say slipped past Kalshi's geofence.Arkansas adds a tax bill to that list. Its complaint asks the court to order Kalshi to pay gambling taxes for every year it served Arkansas customers, on top of restitution, damages and the maximum civil penalties under state law.Kalshi's Safety Tools Become the State's EvidenceThe 57-page complaint is filed under the Arkansas Deceptive Trade Practices Act and turns Kalshi's own consumer protections against it.It lists self-exclusion tools, deposit limits, trading breaks and a partnership with the National Council for Problem Gambling. In the state's reading, those are the tools of a gambling operator.Kalshi insists its products are not gambling, but "its actions speak louder than its labels," Griffin said in a statement.The filing also cites Kalshi's acknowledgment that nearly three times as many users lose money as make money on its markets. For most of its offerings, the complaint calls Kalshi "a pocket-sized bookie."Age is part of the case. Arkansas allows casino gaming and sports wagering only for people 21 and older, while Kalshi accepts traders from 18. The complaint notes that the company recently added deposit limits, extra monitoring and parent-linked accounts for users aged 18 to 20.That group is not small. Traders aged 18 to 20 moved an estimated $5.4 billion on Kalshi this year through late August, according to a CNN analysis.Federal Regulator Takes the Other SideThe Commodity Futures Trading Commission (CFTC), which oversees Kalshi as a designated contract market, is fighting the states in court. On October 27 it sued Utah, the tenth state it has taken to court over prediction markets.CFTC Chairman Michael Selig said Congress gave the agency "sole responsibility to oversee these markets."The appeals courts have not settled that question. The Third Circuit sided with Kalshi in New Jersey's case in April, the Ninth Circuit ruled for Nevada in August, and New Jersey has asked the Supreme Court to resolve the split.Griffin's office set out its position more than a year ago. A formal opinion from October 2025 said a business model like Kalshi's amounts to gambling and needs a state license.Kalshi did not immediately respond to a request for comment. In other state cases, the company has argued that its sports contracts are swaps regulated by the CFTC, not bets.The case was filed in the Circuit Court of Independence County, and the state has asked for a jury trial.This article was written by Damian Chmiel at www.financemagnates.com.