In a temporary restraining order, District Judge Michael Liburdi of Arizona has halted the state's plans to bring criminal charges against prediction market provider Kalshi. The ruling comes after the Commodity Futures Trading Commission intervened, arguing that Arizona's actions could be preempted by federal law. The state had announced 20 criminal charges against Kalshi for allegedly violating Arizona's gambling laws.
However, Judge Liburdi found that the CFTC is likely to succeed in its claim that federal law supersedes state law in this matter. The temporary order, which will remain in effect for two weeks, may be extended if a preliminary injunction is granted. This development is part of a broader dispute over the regulation of prediction markets, with the CFTC arguing that these markets fall under its jurisdiction.
The regulator has expressed appreciation for the judge's decision, stating that using state criminal law against companies complying with federal law sets a dangerous precedent.