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A federal court in Arizona has stopped the state from pressing criminal charges against Kalshi, following a request from the Commodity Futures Trading Commission (CFTC). The order blocks Arizona’s case while broader litigation continues, protecting Kalshi’s status as a designated contract market under federal oversight.
CFTC Chairman Michael Selig welcomed the ruling, saying it helps preserve the agency’s authority and prevents misuse of state laws. He warned that Arizona’s approach could weaken federal regulation if allowed to stand.
“Arizona’s decision to weaponise state criminal law against companies that comply with federal law sets a dangerous precedent, and the court’s order today sends a clear message that intimidation is not an acceptable tactic to circumvent federal law,” Selig said.
The CFTC argues that prediction markets fall under the definition of swaps in the Commodity Exchange Act, giving the agency exclusive jurisdiction. That position is part of a wider push to stop states from regulating firms already under its framework.
War not over for Kalshi
Kalshi’s attempt to secure immediate relief from the Arizona court last week was turned down, leaving the company still entangled in the state’s criminal proceedings.
Judge Michael Liburdi rejected the motion but later issued a separate order after the CFTC stepped in, showing that the federal agency’s request carried more weight than Kalshi’s own filing.
Arizona officials continue to challenge the CFTC’s position, insisting that federal law does not strip states of their authority over sports betting. They argue that platforms like Kalshi resemble gambling operations and should be regulated accordingly. This clash highlights the growing overlap between gambling rules and financial regulation.
The dispute began on 17 March when Attorney General Kris Mayes filed charges against Kalshi, accusing it of running an unlawful gambling enterprise by allowing bets on political elections.
Kalshi has denied the allegations, stressing that its operations differ from casinos and betting firms. For now, the injunction has paused the case, but the larger fight over jurisdiction and legality is still unfolding.
Source: NEXT.io
