In a recent ruling, US District Judge Michael Liburdi has halted Arizona's plans to bring criminal charges against Kalshi, pending further review. The decision comes in response to a motion filed by the Commodity Futures Trading Commission, which argues that Arizona's actions are preempted by federal law. The state had previously announced its intention to file 20 criminal charges against Kalshi, alleging that the company's offerings violate Arizona's gambling laws. However, the court has found that the CFTC is likely to succeed in its claim that Arizona's laws are superseded by the Commodity Exchange Act, and that proceeding with state action could violate the Supremacy Clause.
As a result, the court has issued a temporary restraining order, effective for two weeks, which bars Arizona from enforcing its gambling laws against Kalshi. The CFTC has welcomed the decision, with Chairman Michael Selig stating that it sends a clear message that states cannot use criminal law to intimidate companies that comply with federal regulations. The case is part of a broader dispute between the CFTC and several states over the regulation of prediction markets, with the federal agency arguing that these markets are subject to its supervision.
The ruling is the latest development in a series of mixed results in court, with state and federal courts reaching different conclusions on the issue.