Federal Judge Blocks Arizona's Criminal Case Against Kalshi

U.S. District Judge Michael Liburdi issued a temporary restraining order blocking the government of Arizona from pursuing 20 misdemeanor wagering charges against the prediction market platform Kalshi. The ruling follows a lawsuit filed by the Commodity Futures Trading Commission and the Donald Trump administration, which argued that event contracts are classified as swaps under the Commodity Exchange Act and therefore fall under exclusive federal jurisdiction.

Arizona Attorney General Kris Mayes had filed the criminal charges in March, alleging that Kalshi operated an illegal gambling business by allowing bets on sports and elections. Arizona officials disagreed with the court's decision and stated they are evaluating next steps, maintaining that federal law does not override state authority to regulate gambling.

CFTC Chairman Michael S. Selig condemned the state's actions, asserting that the court's order proves that intimidation is not an acceptable tactic to circumvent federal law. This legal battle is part of a broader federal effort to prevent state-level regulation of prediction markets, with the federal government filing similar lawsuits against Connecticut and Illinois to protect the national derivatives framework.