Arizona won a key court battle against prediction market platform Kalshi on Wednesday, a ruling that was quickly challenged by the federal agency that regulates trading exchanges.
Key Takeaways
- A judge denied Kalshi’s relief request, allowing Arizona’s attorney general to charge the prediction platform.
- The CFTC filed a motion of its own on behalf of Kalshi.
- Arizona says Kalshi is offering unlicensed sports betting in the state.
A federal judge denied Kalshi’s preliminary injunction to keep the state from prosecuting the prediction company for lacking a sports betting license. U.S. District Court Judge Michael Liburdi ruled that the Anti-Injunction Act keeps the federal court from interfering with the state’s criminal proceedings, allowing Arizona's attorney general to pursue 20 charges.
Judge Liburdi held that the later-filed state court case did not preclude application of the AIA since the ban applies so long as the state action is pending at the time the federal court considers the request for injunctive relief, regardless of when the state action was filed. pic.twitter.com/GH7JT7Qmpo
— Daniel Wallach (@WALLACHLEGAL) April 9, 2026
“Kalshi has not sufficiently demonstrated that the Court may issue an injunction against future enforcement,” Liburdi stated in his findings. “Kalshi has offered no evidence that the State will commence any further enforcement proceeding beyond the pending criminal prosecution.”
Enjoying Covers content? Add us as a preferred source on your Google account
Waiting it out
The judge said it would be “inappropriate” to issue relief without Kalshi demonstrating that future enforcement is imminent.
Arizona contends Kalshi is offering unregulated sports event contracts in a state with licensed, regulated sports betting. All non-sports markets are deemed illegal under state law. Kalshi argues it is federally regulated, which supersedes the state’s ability to prosecute.
Luburdi agreed there is a legal conflict but wouldn’t determine if a “swap,” or trade on the exchange, is considered a bet. Arizona is free to pursue charges while the case plays out in the courts.
On the offensive
In response, the Commodity Futures Trading Commission (CFTC) filed a motion asking for a preliminary injunction and restraining order against state prosecution on Kalshi's behalf.
“Arizona’s decision to weaponize preempted state criminal law against companies that comply with a comprehensive federal regime sets a dangerous precedent,” said chairman Michael S. Selig. “The CFTC is committed to vigorously defending its exclusive authority over prediction markets. We are asking the court to send a clear message that intimidation is not an acceptable tactic to circumvent federal law.”
This comes less than a week after the CFTC filed lawsuits against Arizona, Illinois, and Connecticut for sending cease-and-desist orders to prediction market operators.
“The CFTC has clear and longstanding exclusive jurisdiction to regulate event contracts under the Commodity Exchange Act, which preempts state laws purporting to regulate prediction markets,” the federal agency said.
