In response to a motion filed by the Commodity Futures Trading Commission, a federal judge has temporarily barred the state of Arizona from pursuing criminal charges against Kalshi, a prediction market provider. The ruling, made by District Judge Michael Liburdi, prevents Arizona from proceeding with an arraignment scheduled for Monday, April 13, following the state's announcement last month that it would be filing 20 criminal charges against Kalshi for allegedly violating Arizona law by offering betting products. The judge's decision was based on the likelihood of the CFTC succeeding in its claim that Arizona's gambling laws are preempted by the Commodity Exchange Act, and the potential violation of the Supremacy Clause if the state were to proceed with its action. The temporary restraining order will remain in effect for two weeks, with a pending motion for a preliminary injunction that could extend the order.
The CFTC has welcomed the judge's decision, with Chair Michael Selig stating that Arizona's use of state criminal law against companies complying with federal law sets a dangerous precedent. The case is part of a broader dispute between the CFTC and several states regarding the regulation of prediction markets, with mixed results in court so far.