Published on: April 13, 2026, at 11:47 AM.
Updated on: April 14, 2026, at 04:20 AM.
- Federal Judge Blocks Arizona from Enforcing Gaming Laws Against Kalshi
- Commodities Exchange Act (CEA) Grants CFTC Authority Over Swaps
- CFTC Criticizes Arizona’s Attempts to Use State Law Against Kalshi
Kalshi achieved a significant legal milestone on April 10, when a federal district court judge in Arizona issued a temporary injunction against the state’s enforcement of its gaming regulations on the prediction market platform.
U.S. District Judge Michael Liburdi determined that the Commodity Futures Trading Commission (CFTC), the federal body overseeing prediction markets, effectively demonstrated that event contracts, like those provided by Kalshi, fall under the definition of swaps as per the Commodities Exchange Act (CEA).
This suggests that if the case progresses, the CFTC will likely affirm its regulatory dominance over event contracts, superseding state authority.
“Arizona’s use of state criminal law against compliant federal entities sets a troubling precedent, and today’s ruling conveys that intimidation cannot be employed to bypass federal regulations,” stated CFTC Chairman Michael Selig.
In recent legal challenges, the CFTC has asserted that the CEA endows it with exclusive regulatory authority over designated contract markets (DCMs), such as Kalshi, and that state attempts to shut down federally regulated DCMs infringe on powers attributed to the CFTC by Congress.
Arizona Case Sets Significant Precedent
Last month, Arizona broke new ground in its conflicts with prediction markets by filing a 20-count criminal complaint against Kalshi, marking the first instance a state has pursued criminal charges against a yes/no exchange.
In the complaint, Arizona Attorney General Kris Mayes (D) explicitly referenced political and sports derivatives as potential violations of state law. Arizona prohibits betting on elections, and state law mandates that any entity offering products similar to sports wagering must possess a license.
Nevertheless, Liburdi’s ruling indicates a distinction between bets and swaps in terms of regulation.
“The Act designates the CFTC with exclusive jurisdiction over the regulation of swaps that are traded on DCMs,” according to the ruling.
Similar to other states, Arizona contends that federal law does not negate states’ traditional authority over sports wagering. In cases involving prediction market operators, states frequently argue that Congress and the Supreme Court have upheld this principle.
Kalshi Achieves Legal Progress
While Kalshi and the broader prediction markets industry face ongoing legal battles, recent rulings have been favorable for the company.
Before the Arizona ruling, the Third Circuit Court decided that states cannot prohibit prediction market operators from offering sports derivatives, undermining New Jersey’s regulatory ambitions.
This case could establish precedent for an upcoming case before the U.S. Court of Appeals for the Ninth Circuit, where Nevada is contending that sports event contracts are indistinguishable from sports bets.
This is a consolidated case involving Crypto.com, Kalshi, and Robinhood Markets, with oral arguments scheduled to commence on Thursday.