Judge Issues Temporary Injunction Blocking Arizona's Enforcement of Gambling Laws Against Kalshi

# Federal Judge Issues Temporary Injunction Against Arizona in Kalshi Case District Judge Michael Liburdi issued a ruling in Phoenix on Friday that temporarily bars Arizona from enforcing its gambling laws against predictive market operators. The order put the brakes on a criminal wagering case that Arizona filed against Kalshi.

A Monday arraignment hearing for Kalshi was called off due to the ruling.

The ruling was issued in a lawsuit filed by the Trump administration. State prosecutors have charged Kalshi with 20 misdemeanor counts of wagering. The charges against Kalshi allege accepting bets on political outcomes, college sports, and individual player performance.

State prosecutors allege Kalshi is running an illegal gambling operation. Arizona was the first state to file criminal charges against Kalshi. The Commodity Futures Trading Commission sued Arizona in response to cease-and-desist letters sent to Kalshi from state gambling regulators.

The Commodity Futures Trading Commission sued Arizona in response to criminal charges filed against Kalshi. The commission argued Arizona is intruding on its exclusive federal power to regulate national swaps markets.

Judge's Order Cites Federal Preemption Under Commodity Exchange Act The judge's order stated that the federal Commodity Futures Trading Commission had sufficiently shown that event contracts fall within the Commodity Exchange Act's definition of swaps.

The judge's order stated that the Commodity Futures Trading Commission had demonstrated a reasonable chance of success in showing that the Commodity Exchange Act preempts Arizona law. The judge's order stated that the Act grants the CFTC exclusive jurisdiction over the regulation of swaps traded or executed on a Designated Contract Markets.

Kalshi operates by allowing customers to buy and sell Yes or No contracts tied to the probable outcome of an event.

Kalshi has said its product is different from gambling operations because Kalshi's customers engage in swaps between one another instead of betting against the house. Liburdi had previously denied Kalshi's attempt to bar prosecutors from moving forward with the case. Liburdi had previously declined a request from Kalshi for a ruling saying federal law trumps Arizona's gambling laws.

Liburdi stated it was too early in the case for him to rule on the issue of federal preemption.

Reactions from Stakeholders on the Ruling Richie Taylor, a spokesperson for the Arizona Attorney General's Office, said the attorney general's office disagrees with the court's ruling and will evaluate next steps.

Robert DeNault, head of enforcement at Kalshi, said in a posting on X that the ruling is a step in the right direction. Michael Selig, chairman of the Commodity Futures Trading Commission, said Arizona's decision to weaponize state criminal law against companies that comply with federal law sets a dangerous precedent.

Michael Selig, chairman of the Commodity Futures Trading Commission, said the court's order sends a clear message that intimidation is not an acceptable tactic to circumvent federal law.

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Broader Legal Actions Involving Kalshi and Prediction Markets Kalshi sued Arizona, Utah, and Iowa to stop anticipated state actions against the platform.

Federal and state judges in Nevada and Massachusetts issued early rulings in favor of states looking to ban Kalshi and its competitor Polymarket from offering sports betting in their states. Federal judges in New Jersey and Tennessee have ruled in favor of Kalshi.

The federal government filed lawsuits against Connecticut, Arizona, and Illinois earlier this month challenging their efforts to regulate prediction market operators.

The Trump administration has backed the platforms.