Judge pauses Arizona's Kalshi case
A federal judge temporarily blocked Arizona’s criminal prosecution of Kalshi, siding with the CFTC and pausing the state’s attempt to apply gambling laws to prediction‑market operators. The rulings put a federal restraining order in place and highlight a legal split between federal regulators and state efforts to curtail prediction markets. Reporting links the decision to broader regulatory sorting that could affect where and how prediction venues operate. (benzinga.com) (businessinsider.com) (theverge.com)
A federal judge in Phoenix temporarily blocked Arizona from pursuing its criminal case against Kalshi on April 10, pausing the state’s first prosecution of a prediction-market operator. (theverge.com) United States District Judge Michael Liburdi granted a temporary restraining order after the Commodity Futures Trading Commission asked the court to stop Arizona from enforcing state gambling laws against Kalshi. The order halted a criminal case brought by Arizona Attorney General Kris Mayes and called off a Kalshi arraignment that had been set for Monday, April 13. (businessinsider.com) (usatoday.com) The Commodity Futures Trading Commission said on April 8 that it had asked for both a temporary restraining order and a preliminary injunction, arguing Arizona was trying to apply state criminal and gambling laws to markets the federal agency regulates under the Commodity Exchange Act. The agency and the Department of Justice had already sued Arizona on April 2. (cftc.gov 1) (cftc.gov 2) Prediction markets let users buy “yes” or “no” contracts tied to future events, and Kalshi says those contracts are federally regulated derivatives rather than sports bets or election wagers. Arizona says the same activity violates state laws against unlicensed wagering and election betting. (usnews.com) (azag.gov) That split has been building for months. In its complaint, the Commodity Futures Trading Commission said the Arizona Department of Gaming sent Kalshi a cease-and-desist letter on May 21, 2025, and Arizona escalated on March 17, 2026, when Mayes filed 20 misdemeanor counts against Kalshi entities. (cftc.gov) (azag.gov) Liburdi had ruled the other way two days earlier. In an April 8 decision, he denied Kalshi’s own request to block the prosecution and said it was too early to decide whether federal law preempts Arizona’s gambling laws. (independent.co.uk) (azcapitoltimes.com) The April 10 order did not settle that question. It put Arizona’s case on hold while the court considers the broader fight over whether states can police federally regulated prediction venues as gambling businesses. (coindesk.com) (cftc.gov) Arizona has argued it will not let a company “place itself above state law,” while Kalshi has said its exchange operates under federal approval. The restraining order leaves both positions intact for now, but it stops Arizona from testing its criminal theory in court this week. (azag.gov) (theverge.com)
