- U.S. District Judge Michael Liburdi temporarily barred Arizona from prosecuting Kalshi, canceling a scheduled Monday arraignment.
- The ruling affirms the Commodity Futures Trading Commission (CFTC) maintains “exclusive jurisdiction” over event contracts, classifying them as swaps.
- Arizona Attorney General Kris Mayes previously filed 20 misdemeanor counts against the platform, alleging illegal sports and election wagering.
Kalshi, a federally regulated financial exchange offering event-based prediction contracts, secured a federal injunction against state-level criminal charges on Friday. U.S. District Judge Michael Liburdi temporarily barred Arizona prosecutors from enforcing local gambling statutes against the platform.
The ruling halts a criminal case initiated by Arizona Attorney General Kris Mayes. In March, the state filed 20 misdemeanor counts against Kalshi, accusing the platform of operating an unlicensed sportsbook and facilitating illegal wagers on the 2026 state elections and the 2028 presidential race.
The federal block forces the cancellation of Kalshi’s arraignment, which was scheduled for Monday in Maricopa County Superior Court.
CFTC Asserts Federal Preemption
The federal intervention originated from a lawsuit filed by the Commodity Futures Trading Commission. The federal regulator sued Arizona after state officials sent cease-and-desist letters to Kalshi and pursued criminal charges.
The CFTC argued that Arizona was overstepping its authority by attempting to regulate national swaps markets. Judge Liburdi agreed with the federal agency’s assessment regarding jurisdictional dominance.
His order stated the CFTC demonstrated a reasonable chance of proving the Commodity Exchange Act preempts Arizona law. The judge determined Kalshi’s “Yes” or “No” event contracts meet the federal definition of swaps.
“The Act grants the CFTC ‘exclusive jurisdiction’ over the regulation of ‘swaps,’” the judicial order stated.
State vs. Federal Friction
This legal dispute highlights ongoing regulatory friction between state attorneys general and federally cleared financial platforms. Arizona officials maintain they possess the authority to block election betting and unlicensed wagering within state lines, regardless of a platform’s federal status.
Kalshi operates as a designated contract market under strict CFTC oversight. The company argues this classification permanently exempts it from state-level gambling enforcement.
Local authorities indicated they plan to review their legal options following the Friday injunction. “The attorney general’s office disagrees with the court’s ruling and we will evaluate our next steps,” said Richie Taylor, a spokesperson for the Arizona Attorney General’s Office.
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