A federal judge has temporarily blocked Arizona officials from enforcing state gambling laws against the prediction market platform Kalshi. The court sided with the Commodity Futures Trading Commission (CFTC), which argues its exclusive federal authority over derivatives trading preempts state action. This ruling is part of a broader regulatory clash over whether event-based trading contracts constitute financial instruments or illegal gambling.
A federal judge in Arizona has temporarily barred state officials from enforcing gambling laws against Kalshi. The order grants a request from the CFTC and the federal government to halt state-level action against contracts on CFTC-regulated markets. The core dispute is whether Kalshi’s “event contracts” fall under federal derivatives law or state gambling statutes.
Judge Michael Liburdi found the CFTC is likely to succeed in arguing these contracts qualify as “swaps” under the Commodity Exchange Act. This places them within exclusive federal jurisdiction over swaps traded on designated contract markets. The restraining order prohibits Arizona from initiating civil or criminal enforcement tied to Kalshi’s event contracts.
The order will remain in effect until April 24 while the court considers a longer-term preliminary injunction. This case adds to a growing national debate over the classification of prediction markets.
Last month, Utah lawmakers passed a bill targeting Kalshi and Polymarket that classifies proposition-style bets as gambling. Separately, a Nevada judge recently extended a ban preventing Kalshi from offering event-based contracts in that state. The Nevada court found the platform’s offerings closely resemble traditional sports betting governed by state gaming laws.
