Published on: April 13, 2026, 11:47 h.
Updated on: April 13, 2026, 11:47 h.
- Federal court issues a temporary injunction preventing Arizona from enforcing gaming regulations against Kalshi.
- Commodities Exchange Act (CEA) grants the CFTC regulatory oversight over swaps.
- Arizona initiated a criminal case against Kalshi last month.
Kalshi achieved a significant legal milestone last Friday when a US District Court judge in Arizona issued a temporary injunction against the state’s enforcement of gaming laws on the prediction market operator.
US District Judge Michael Liburdi determined that the Commodities Futures Trading Commission (CFTC), which oversees prediction markets, convincingly demonstrated that event contracts like those offered by Kalshi align with the Commodities Exchange Act’s (CEA) definition of swaps. This indicates that should the case proceed, the CFTC is likely to prove in court that it holds the regulatory authority over event contracts rather than the state of Arizona.
“Arizona’s choice to invoke state criminal law against compliant entities under federal regulations creates a troubling precedent. The court’s ruling today conveys a clear message: coercion is not an appropriate means to bypass federal law,” stated CFTC Chairman Michael Selig in an official statement.
In recent rebuttals to certain states, the CFTC asserts that the CEA endows it with the authority to regulate designated contract markets (DCMs), which includes Kalshi, arguing that states’ efforts to close federally recognized DCMs infringe upon the powers bestowed by Congress.
Arizona Case Marks a Legal First
In a groundbreaking move, Arizona filed a 20-count criminal complaint against Kalshi last month, representing the inaugural instance of a state imposing criminal charges against a yes/no exchange.
In this complaint, Arizona Attorney General Kris Mayes (D) explicitly highlights political and sports derivatives as potential breaches of state law. Arizona prohibits betting on elections, and state statutes dictate that any organization offering products similar to those in sports betting must obtain a license. However, Liburdi’s ruling seems to differentiate between bets and swaps from a regulatory standpoint.
“The Act provides the CFTC with ‘exclusive jurisdiction’ over the governance of ‘swaps’ traded on DCMs,” stated the order.
Like many states, Arizona contends that federal law does not diminish states’ “traditional authority” over sports betting. In instances against prediction market operators, states often reference that Congress and the Supreme Court have upheld this principle.
Kalshi Securing Legal Victories
Although Kalshi and the broader prediction markets sector face numerous legal challenges, the company has recently secured some promising rulings. Before the Arizona decision, the Third Circuit Court ruled that states cannot prevent prediction market operators from providing sports derivatives, undermining New Jersey’s ambitions to regulate the field.
This case could set an important precedent as it might influence a similar case currently being deliberated by the US Court of Appeals for the Ninth Circuit. In that case, the state of Nevada argues that sports event contracts are equivalent to sports bets.
This is a consolidated case involving Crypto.com, Kalshi, and Robinhood Markets. Oral arguments in the Ninth Circuit case are set to begin Thursday.